The Global Bailout: Red Flag or Good Times?
The markets lit up yesterday as the Fed, the BoJ, the ECB, the BoE, the BAC, and the SNB announced an agreement to reduce the price of dollar liquidity swaps to…
...Ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.
Naturally, this was fantastic news for the market, and not only did it coax the bulls to jump on all the widening spreads and pump the S&P to its best day since March ’09, but it also showed the world that the Central Banks actually know what’s going on and that they’re very much willing to work together to fix it. Does this mean its all blue skies and chirping birds from here on out though? Is this really a good thing?
I’m not so sure monkeys.
When was the last time you heard the world’s bankers call on each other to fix something… small?
I mean let’s face it; here’s a group of dudes who, unless you have them by the short and curlies, you could pretty much count on to bicker between each other and make a complete mess of things, yet, here they are, banded together in an orchestrated effort to fix the economy. If that isn’t a sign that the end is pretty fucking nigh for the EU then I don’t know what is.
What say you monkeys? Am I totally wrong in thinking that this was a serious red flag? Or was this truly a good sign of things to come?
Curious what you guys think, after all, this is the perfect time for the Eurocrats to step in and make their move. Unlike with their usual efforts, they have momentum behind them right now so if they do decide to do something about it, chances are it'll work. And word on the street is that Merkel's working on something big right now. On the other hand this bailout is nothing but throwing liquidity at a solvency problem, so if they skip this opportunity it will fix absolutely nothing and just piss off the market - something that they absolutely do not want.
Let see how you guys view this whole thing. I'm not buying it the Merkel bit at all, but for all our sakes I'm kinda hoping that it's true.
Nothing has been fixed at all.
I reckon a big bank was close to requiring a bailout Tuesday night, maybe BAC? Stock would have plunged if it'd broken $5. Or a big European bank. In my opinion it certainly hasnt 'solved' anything but at least it shows the Central Banks are willing to work properly. Lets just hope this wasn't their "biggest bazooka"!
Good in the short term, but in the long-term, if the PIIGS don't pull their heads out of the sand (same with US, Illinois, California and a hundred other places) then it won't matter,
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