Wednesday, December 21, 2011

QE in Europe: $645B Through The Backdoor of 543 Banks; Cheap 1% Loans = Money Printing; Lack of Funding in 2012

The ECB announced today an unprecedented 489B euros ($645 billion) in 1% loans today,

French President Nicolas Sarkozy is quoted as saying that has banks could use the loans to buy even more government debt. Mindboggling. Well, sure, if their losses will always be covered up.
Bloomberg quotes Simon Derrick, chief currency strategist at Bank of New York Mellon Corp, saying that the loans amount to quantitative easing “through the backdoor.”

Weakening the Euro

“What the ECB is doing is providing ultra-cheap money to banks, which in turn are going to be in there buying the sovereign debt up,”  “That’s good news in the sense that it’s clearly going to help sovereigns in the near future, but it’s also printing more money. That’s going to start to weigh on the euro over time.”

The markets, which were positive, reversed sharply lower after the announcement as the annoucement may mean that the banks foresess a lack of funding in 2012.

This is all a casino, so who knows what will happen next.

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