Wednesday, October 26, 2016

Is The German Credit Card
Maxed Out On The Eurozone?
"It is the GERMAN CREDIT CARD that has eliminated fragmentation, but at what cost? And if Merkel’s popularity continues to erode, financial markets will question the broad guarantee of the German credit card. Last I checked, nations with LOW FICO scores were charged much higher rates. One of Draghi’s great slight of hands was his response to the question about the ECB’s purchases of corporate debt. In answering whether the ECB was buying less than investment grade corporate debt, Mr. Draghi obfuscated by declaring the corporate purchases an unmitigated success because it lowered the borrowing costs across all sized firms even corporations that did not issue bonds because the lower yields on corporate bonds forced banks to lower rates on loans to small and medium enterprises (SMEs). Well, in fact this has not taken place for EU companies but it has led to many U.S. corporations using the ECB’s generosity to issue U.S. corporate debt in EUROS at artificially depressed interest rates. Foreign borrowers have issued at least 40 billion in euro-denominated debt since the ECB enhanced its QE. So while many European firms have not benefited, the global financial structure has been a recipient of Draghi’s benevolence … all on the German credit card. Firms such as Berkshire, JNJ, Honeywell, Blackstone Group, Wells Fargo and several others have loaded the ECB balance sheet with more debt. The ECB needs to keep its asset buildup operating at high speed before the credit card is maxed out. In a last great bit of financial subterfuge, Draghi maintained there is no market bubbles because bubbles require leverage and ECB research shows the world still deleveraging. Yes Mario, the private sector in many parts of the world is still deleveraging but the GLOBAL CENTRAL BANKS ARE MASSIVELY LEVERAGING GLOBAL BOND MARKETS. The ultimate leveraging machine is the answer to FED GOVERNOR JEROME POWELL’S riddles. When asked who guarantees the ECB, he said, 'THEY HAVE A PRINTING PRESS.' The use of fiat currency to debase debt and currency is the penultimate leverage machine and that is truly Archimedes’ lever."
- Yra Harris
LINK HERE to the commentary

1 comment:

Anonymous said...

Larry Lindsey Silences CNBC: "The Most Dangerous Candidate Is The One The Media Is Paying The Least Attention To"

Lindsey eloquently explains that "they are creating a bandwagon effect... it's pretty clear what side the news media is on here and that is something that should worry markets after the election... If Mrs. Clinton becomes President, who will keep an eye on her, on the kinds of side-deals that may be happening, on the regulatory abuses...?"