All the signs were there, starting with the fact that the Fed and ECB together had supposedly the flooded the world with digital money yet a palpable “something” was really off. Ben Bernanke’s central bank had unleashed both ZIRP and QE, the latter of which had finished up a couple months before. In Europe, Jean Claude-Trichet’s outfit was “highly accommodative” in its own right if not quite as openly as their American counterparts.
Then, on Monday May 3, 2010, Trichet and the ECB’s Governing Council issued a notification that it was, well, decidedly ominous:
In other words, the repo market was increasingly rejecting Greek sovereigns on reasonable collateral terms. Unable to source suitable alternatives, apparently, financial firms in Europe pleaded with the ECB to open up its emergency operations to take in the stragglers; can’t pledge in repo, pledge it to the ECB. Read more…..
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