Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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From: Eva	12/21/2011 11:54:07 AM
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The ECB's LTRO - A Giant Inflationary Push Event he most egregious estimates of the size of today's ECB refinancing operation turned out to be too low - all in all the banks borrowed nearly € 500 billion. We take another look at the pros and cons of the 'carry trade' argument, i.e. the idea that banks will use the ECB's 'free money' to buy more sovereign bonds. The issue is still widely debated and opinions differ greatly. One thing is however clear: there will now be nearly € 200 billion in additional money floating about (the net after deducting funding that is rolling over). Moreover, it is also clear that governments across the euro area have begun to employ all sorts of tricks to help their banks escape the funding squeeze, with Italy's government proving especially inventive. Even the government's own buildings are now ending up as collateral on the ECB's balance sheet. It is difficult to imagine that there is no quid pro quo involved and as a result we would expect the current pause in the crisis to continue for a little while. Among the likely next triggers for its resumption, the possible downgrades of France and of the EFSF rank high up on our list. acting-man.com

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