Dan Amoss, CFA is the managing editor for strategic investment and contributing editor of whiskey
All of the central bank desperate to stop the stress of the buildings in the global banking system. Despite what they say, job no. 1 each central bank will do whatever is necessary to prevent the collapse of the chaotic banks caused by the “bank runs.” This central banker crazy, and no one will stop them from supporting the status quo.
A group of the central banks of the largest in the world announced a coordinated programme of easing on Wednesday morning. This would involve printing more of their home currency and lending another currency the central bank, which, in turn, will again lend this currency to local banks.
Many European banks, in effect, has been disconnected from personal credit loans on the market. So the central bank will ignore the fact that most European banks bankrupt and offering easier access and easier for funding long term where the currency they need to borrow.
Entirely predic result will be similar to what we saw in the United States: a zombie bank assets which will feature less private sector loans and more and more government bonds.