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One of these PIGGs is not like the others - Joost de Jong

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  • #16
    Re: One of these PIGGs is not like the others - Joost de Jong

    I guess the banks in Spain aren't so strong after all.



    http://www.bloomberg.com/news/2010-0...f-the-day.html

    Spanish banks will stay addicted to European Central Bank funding “for years to come” as investors sidestep their bonds, according to analysts at Evolution Securities Ltd.
    The CHART OF THE DAY shows borrowing from the ECB by the nation’s lenders since the inception of the euro, based on Bank of Spain figures. They asked for a record 130 billion euros ($166 billion) in July, accounting for 29 percent of total borrowing from the central bank, almost four times their average 8 percent share since 1999, according to London-based Evolution.
    “Guaranteed access to cash at 1 percent is a difficult addiction to kick, especially when the market isn’t sure how much it wants to lend,” said Gary Jenkins, Evolution’s head of credit research. “The amount needed is likely to remain elevated for years to come, compared with what it used to be.”
    Spanish banks have been all but shunned by international investors since the collapse of a housing boom in 2007 triggered the worst recession in 60 years, with the unemployment rate surging above 20 percent. Bad loans reached 5.5 percent in May from 4.7 percent a year earlier.

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    • #17
      Re: One of these PIGGs is not like the others - Joost de Jong

      Can anyone tell me where the ECB gets the funds to lend to Spain ... and anyone else for that matter?

      Can they simply "print" Euros and lend out as the Fed does? If so, I don't readily comprehend how "the market" can check such a ponzil-like rollover scheme. One can sell the euro, sell the $, sell the yen etc, but one has to hold some bonds and currencies somewhere. With legal tender laws and gold as currency outlawed, is this a checkmate by the world central bankers, i.e., "you may not like our game, but there is none other on the planet"?

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      • #18
        Re: One of these PIGGs is not like the others - Joost de Jong

        Originally posted by vinoveri
        Can anyone tell me where the ECB gets the funds to lend to Spain ... and anyone else for that matter?
        Same place the Fed gets their funds from: the silicon fairy.

        Although to be fair, the ECB does sell also bonds unlike the Fed (The Fed only buys them...)

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