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The news has been generally “good” ever since the European Central Bank made it clear that it will print money rather than see major banks or minor nations get what is coming to them. Like its US counterpart, the ECB will not permit a major bank or sovereign debtor to go bust. “ECB sees signs of let-up in debt crisis,” is today’s headline in The Financial Times. Let’s see…the news report goes on to tell us that Spain and Italy were able to sell 22 billion euros of debt yesterday, proving that they can still finance their deficits…and that, therefore, we have nothing to worry about.
To whom did they sell their bonds? We don’t know, but we presume the buyers were banks who were investing money they got on favorable terms from the ECB. So, you see, dear reader, that their willingness to buy the debt does not necessarily mean that either buyer or lender is solvent. Probably, neither is…
But with fears of a debt debacle in Europe off the front page headlines…the financial world has seemed rather benign, especially in America. US stocks have rallied since October. The latest unemployment report from the feds was surprisingly upbeat. The dollar is strong. And US consumers are now re-leveraging, going deeper into debt in order to buy things.Does this mean the Great Correction is over and done with?
Read more: Money Printing: The Ugly Truth Behind the “Good News”
