Banks are reluctant to provide liquidity to those in need
Well, this news reminds me to another afternoon discussion with my dutch friend, Mr. S.
Mr. S: "ECB has to do what they do, the liquidity is needed, and the market is more calm now."
Me: "Yes, and, no. By the way, are liquidity really goes to those in need?"
If I recalled the package right, ECB provided Banks what they requested. And the capital shortage are mainly attributed to the bad government bond positions. These banks are provided liquidity, roll-over to new bonds, and the yields drop into a "reasonable" level. However, are those in the main street really feeling relieved?
Probably not.
With consumers cutting back their spending, there must be a few more problems on the road.
Bumpy!
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