http://globaleconomicanalysis.blogspot.com/2011/08/bailout-of-italy-on-tap-ecb-to-become.html
Buyer of Only Resort
The idea the ECB can "protect" Italy by buying Italian bonds is as silly as the idea the ECB could protect Greece by buying Greek bonds. We all know how the Greek purchase turned out.
Market forces will overrule anything the ECB can do.
Worse yet, the ECB is exacerbating the problems. If the ECB misprices bonds and does so repetitively, other participants will eventually step to the sidelines and the ECB will become the buyer of only resort, with a balance sheet full of garbage and obvious implications.
Who Will Bail Out the ECB?
Who pray tell will bail out the ECB? The correct answer is no one, and this is one of the driving forces of gold.
Buyer of Only Resort
The idea the ECB can "protect" Italy by buying Italian bonds is as silly as the idea the ECB could protect Greece by buying Greek bonds. We all know how the Greek purchase turned out.
Market forces will overrule anything the ECB can do.
Worse yet, the ECB is exacerbating the problems. If the ECB misprices bonds and does so repetitively, other participants will eventually step to the sidelines and the ECB will become the buyer of only resort, with a balance sheet full of garbage and obvious implications.
Who Will Bail Out the ECB?
Who pray tell will bail out the ECB? The correct answer is no one, and this is one of the driving forces of gold.
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