The trouble with borrowing money is that it has to be repaid. The ECB is calling in 445bn € on Thursday. Hence the Greek public sector strikes today and the howls of pain from Spanish banks who in the words of Sir Mick can't get no liquidity other than from the ECB. Investors running big Euro bond carry trades are feeling their sovereign risk more acutely. Write downs of their sovereign assets will emerge eventually.
The Euro is falling even against sterling. To cap it all the BIS, the central banks' central bank, is calling for fiscal and monetary tightening. European banks are still on life support is the DT headline on their report on the BIS statement. You can't roll over loans at zero rates indefinitely.
As I reported yesterday even in la Belle France things look less than rosy. For the official view click on link below to see Christine Lagarde putting the French view:
Christine Lagarde
On the sovereign bond markets Greek, Portuguese and Spanish spreads are all higher. In equities, European shares fell to their lowest in nearly three weeks with the main pan-European share index down 1.7 percent. Confidence is fragile and falling.
Meanwhile in Cam land inflation is picking up. Do not believe the arguments that core inflation is going down. All that represents is economists taking the items out of the index that are going up. How long before the UK's comrades start striking?
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