Monday, February 27, 2012

EU Pantomimes begin to run concurrently!

The IMF is now complaining that the EU Commissions action last week, in threatening to cut off Hungary's cohesion funds of €495 million, is having an adverse affect on its negotiations for a loan to rescue the Hungarian currency, already underway before the threat was made, read here.

Meantime Bloomberg reports that the German Parliament is being made to withdraw a demand that the IMF maintains its level of support at previous levels for Greece, even though the IMF was refused further financing at the weekend, because the EU could not agree to raise the firewall, because the German Parliament says it cannot afford it, hence the IMF's shortage of funds?

Yet as I tweeted earlier today, Mario Draghi at the ECB has the cure for all of this. He has decided he can create as many virtual Euros as he wishes and lend them all to Europe's banks regardless of their own relative strength, and all at only 1% p.a. for three years. These banks have been this morning lending on at 1.2% for 6 months and 1.29% for nine months to the sovereign state of Italy, which is one of the powers (I use the term figuratively) standing behind the ECB. That latter point will perhaps explain why Draghi's plan can immediately be seen for what it is. Otherwise in complete lalaland, the entire world could borrow from Draghi for three years at 1% but who would be there to cover the losses - something, perhaps, for the German Parliamentarians to ponder before they vote at 6 pm this evening!

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Blogger James Higham said...

In a land where defaults are not defaults any more and where money is a ledger entry, it all comes down to which agenda prevails.

1:48 PM  

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