liquidity

US money markets have dramatically cut their exposure to European bank paper. This has been widely reported and has intensified the dollar funding needs of some European, especially French and Italian banks. When we talk about European…

They are not really brothers, but Mario Draghi and Mario Monti are countrymen and are doing a great deal to respond to the European debt crisis in ways that were unimaginable until very recently.

We think markets are getting too bulled up on the IMF headlines today. As the saying goes, “Show me the money!” Until then, we remain skeptical that the IMF will be able to obtain the extra funding it desires. Even if the IMF does get the…

Fortunately the ECB has deep pockets, and as I argue in this post, these will probably suffice to keep short term bond yields down to acceptable levels, and help the banks fund themselves and recapitalise. What the ECB’s LTRO’s won’t do is…

Despite the ongoing hawkish rhetoric from the ECB, there are signs that they are getting it: The LTRO can't work, as you're essentially just swapping one liability for another one (albeit more long term in duration, therefore making it…

Perhaps the main point to take to heart from the events of the last week is the way the recent ECB liquidity measures have apparently been able to stabilise the debt crisis, at least for the time being, even while it is not clear that they…

After the better than expected Spanish bond auction, eurozone sovereign spreads came in significantly yesterday. Even before today's auction, the widely watched Italian 10-year bond yield had fallen to 6.63 percent.

Central Banks, whenever they buy any asset create new reserves. Commercial banks and people do NOT have the capacity to destroy those reserves. Once the Fed or ECB wires the money or creates that asset line item on its spreadsheet, there is…

Warren Mosler proposes a full FICA suspension, a $150 billion one time distribution to the states and an $8/hr federally funded transition job for anyone willing and able to work. However he believes these proposals will likely not be…

It is my view that the ECB is now the only thing between the economy and widespread bank failures, but I also concur that the consequence of this is a permanent outsourcing of the interbank market in Europe to the ECB's balance sheet and,…