Posted on 06/29/2010 7:58:22 AM PDT by blam
A Failed Debt Auction Proves That The ECB Is Being Ridiculously Dumb
Joe Weisenthal
Jun. 29, 2010, 7:42 AM
Sorry, but it's becoming more and more obvious that the crisis in Europe is a major referendum on the ECB.
First, there's this Spanish bank liquidity issue. Basically, the ECB is withdrawing what appears to be a key source of support, at what seems like the worst possible time.
And then there's the fact that while the ECB is buying PIIGS sovereign debt, it's also "sterilizing" the purchases with asset sales,
But why is it doing this?
What possible justification does the ECB have in reducing liquidity, which is exactly what asset sales do by sucking cash out of the market?
Anyway, the market is clearly giving a monster rejection of this strategy.
FT Alphaville reports that an ECB fixed-term deposit auction this morning has gone over horribly, with yields coming in far higher than expected, and with the total amount sold less than the €55bn expected.
[snip]
(Excerpt) Read more at businessinsider.com ...
No Worries...The Won is there to tell them how to do things.
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