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"ECB will take junk bonds and other vastly over-priced assets as collateral for loans to the Spanish, Greek and other European banks. This will offset an additional estimated $500 billion in new write-offs by bondholders of Greek debt."
If Greece leaves the euro, "contagion will spread overnight to Spain, Portugal, Ireland, and perhaps Italy."
Inflationary countermeasures are planned. Obama hopes to hold on through election. Fed and ECB assets "fall far short" of an estimated $4 trillion or more euro liability private banks face.
Four and a half years into crisis conditions, they're worse off than ever. Recapitalizations solved nothing. They bought time for a greater day of reckoning.
At the same time, bank runs are hitting troubled EU economies. Greece noticeably is affected. Euro exit fears motivate people to transfer funds elsewhere. Spanish depositors are scared. They're doing the same thing.
Portugal, Ireland and Italy are vulnerable. Once outflows start, stopping them isn't easy. Potential runs in other countries could follow. It's similar to selling weak sovereign debt for safe havens.
Bank runs are especially pernicious. They can happen quickly and spread. The potential for financial crisis grows. Is it happening again? Only the fullness of time will tell.
In America, insider selling surged. Corporate stock buybacks fell to a three year low. None of this signals confidence.
In early May, JP Morgan's trading loss sent shock waves across Wall Street. The $2 billion announced reflects the tip of the iceberg. Expect much more to come. Other banks face similar risks.
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