...the ECB has a rollover problem coming, in that they need to roll a significant amount of term liquidity deposits Thursday.
If those rolls fail, the markets will crash. Both credit and equity.
If the ECB tries to machine it's way around a failure the results could be cataclysmic.
The Real EffectI have warned for over two years that these BS games played by the various governments and central banks WOULD NOT WORK and in fact CANNOT, mathematically, work.
The law of supply and demand is dictating at this point that there isn't a whole lot of demand for debt at the moment. There's plenty of that to go around. So when given demand goes down, the price does as well, therefore the yield on a bond will go up. At this point the market is saturated with debt as evidenced by the direct actions that the Central banks are taking in the auctions over the last few months. Some have even failed outright.
And the Euro Central Bank only has to roll over, 420 BILLION Euros.
The S&P is in a death cross below 1040, Berkshire possibly has to put up $8 billion in collateral, France in the cross-hairs of the CDS kamikazes, and oh yeah, we've got our own rollover to worry about too. But it's all ok because Krugman realizes it's a depression now.
Anyway you shake it, today is likely to be a very dangerous financial day.
No comments:
Post a Comment