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European Central Bank moves to kill Zombie bank financing.

 
Truthache
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07/05/2012 09:56 AM

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European Central Bank moves to kill Zombie bank financing.
This is huge if they actually enforce it.

[link to blogs.marketwatch.com]


The ECB said Tuesday that it won’t accept any more government guaranteed bonds as collateral.

“Until now, many European governments sought the least costly way to recapitalize their banks. Banks would issue their own bonds, secure a government guarantee for them, and then use them as collateral to borrow from the ECB,”......

The new rule limiting guaranteed bonds as collateral effectively blocks one path that countries have sought to avoid those hard decisions.”.....

This is, surprise, particularly bad news for Italian and Spanish banks....

in warm pursuit...
Truthache (OP)
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07/05/2012 10:09 AM

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Re: European Central Bank moves to kill Zombie bank financing.
It means that struggling countries can't keep repackaging their debt and buying more on their worthless guarantee that it will be repaid.

Note to countries using this all too popular Ponzi finance method:

Your word is not collateral- it's just a promise- and an obviously empty one at that.
in warm pursuit...

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