The Daily Capitalist / by Jeff Harding / May 29, 2012
There is a lot of chatter about the eurozone, Greece, Spain, Germany, and the European Central Bank (ECB). And rightly so since we appear to be reaching a critical stage there. Some have raised the point that there is nothing the ECB can do to solve their problems. That is correct in the long run. But in the short run, never underestimate a desperate central bank’s willingness to print.
This morning I was referred to an article from Phoenix Capital Research that was published on Zero Hedge last week that posited that “THERE IS NO ENTITY ON EARTH THAT CAN BAILOUT EUROPE.” I suggest you read it; it’s not long. It shows the complexity of the situation for a system that was born to fail. Phoenix has another article today on this topic on their web site.
Their first point was:
The ECB is tapped out. Having provided over €1 trillion in funding via LTRO 1 and LTRO 2, taking on over €700 billion in PIIGS debt putting its own solvency at risk, it simply cannot launch another LTRO scheme for the following reasons:
Those banks accepting LTRO funding are being punished by the market, thereby indicating that ECB funding is not financially toxic to a firm’s reputation in the market place.
The positive effects of LTRO 2 lasted only one month compared to several months for LTRO 1. Thus, we find that with each additional intervention the benefits are shorter lasting.
Thanks to BrotherJohnF