Bank Liquidity, Courtesy of You
As a euro crisis became more likely last week and stocks threatened to take a dive in response, the central banks geared up to do what central banks always do: throw more money at the problem.
The G7 nations released a statement late last week in an attempt to head off an anticipated drop in the stock markets in reaction to the latest news from the Eurozone.
Although couched in the indirect, jargon-laden verbiage of “economist-speak,” the statement expressed the main premise loud and clear:
“Monetary policies will maintain price stability and continue to support economic recovery. Central Banks stand ready to provide liquidity to banks as required [emphasis ours]. We will take all necessary actions to ensure the resilience of banking systems and financial markets.”
The EU Economic and Monetary Affairs Commissioner Olli Rehn commented, as cited by Tyler Durden of ZeroHedge.com:
If it worked—if your generous contribution were to ensure that the world economy would recover—it might be a good investment. The problem is, the Central Banks are throwing your good money after bad.