April 16, 2012
A Trillion Euros Didn’t Buy Much Time
By: Rick Ackerman, Rick's Picks
Europe’s bankers will need to think really big the next time they try to construct a proper “mother of all firewalls.” A nearly trillion-euro package that was on the table a few weeks ago would combine €440 billion of uncommitted funds from an existing credit “facility” with €500 billion pledged toward a new one. Those may sound like big numbers, but they evidently were not big enough to prevent market forces from roiling Europe’s stage-managed bond markets last week. The result was a surge in yields on Spanish debt that spooked U.S. stocks, among others, into their worst weekly decline of 2012.
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For their part, U.S. stocks looked dismal last week, with the Dow off 1.6% and the S&Ps down 2%. However, such relatively mild selling may prove to be just a warning tremor if Europe’s debt crisis is about to return to the headlines. On Friday, investors’ fears ratcheted into the red zone when it became apparent that a tidal surge of borrowing from the European Central Bank had been necessary to keep Spain’s banks afloat in March.
More: http://news.goldseek.com/RickAckerman/1334584800.php
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