What Happens When Unlimited Runs Out?
January 20th, 2012Via: Bloomberg:
European Central Bank President Mario Draghi’s unlimited three-year loans to euro-region banks may give Italy and Spain only temporary respite from the region’s debt crisis.
Two-year Italian and Spanish notes rallied since the ECB said Dec. 8 that it planned to offer as much liquidity as banks wanted in exchange for eligible collateral. The gain on the short end of the market outpaced longer-dated debt on concern the nations’ austerity plans won’t plug deficits and reduce Europe’s largest debt load. Yields on Italian two-year notes fell to the least relative to 10-year bonds in 21 months.
“This is about buying time,” said John Davies, a fixed- income strategist at WestLB AG in London. “It’s only when the market believes Italy and Spain have returned to sustainable debt levels that you can say the crisis has truly ended.”
This about the final coup de grace being administered to the nation-state model by private equity (read: “old money”): the mortgaging of everything left under state-managed auspices.
For a time, privatization was all the rage in the mainstream press, until it became painfully obvious that the “buzz” (propaganda) was patently false based on results.
Germany sold its postal system into corporate ownership a few years back, all the while trumpeting how it would save “everyone” money in the papers and every other conceivable space where they could buy up eyes and ears.
The direct, observable result: postal rates to the consumer shot up immediately. More than double.
It’s buying time alright. Say hello to your new global masters, currently buying up countries and resources near you at bargain basement prices.