Ahead of Sunday’s election in Greece, central bankers stand ready, again. With all the water central banks have expended out of their fire hoses over the past few years in their attempt to ‘do something,’ I can only think of magic candles. Those candles you blow out that only flare up again immediately after. The western world is choking on excessive debt and a euro bond, banking union, broad deposit guarantees, enhanced lending programs, QE and various liquidity facilities only further socialize risk and try to ram down the throat of economies that need to delever to go out and borrow more. Bondholders have been put on quite a pedestal as they are the only beneficiary of this ridiculous magic candle game. With respect to the reuters story on central bank readiness ahead of the weekend, it is bank runs that they seem most immediately concerned about.

Category: MacroNotes

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One Response to “Magic candles”

  1. chrisrossini says:

    Unfortunately, it is not water that central banks have expended….but more fire!

    The creation of money out of thin air cannot solve the problems (distortions) it created in the first place. It just creates more distortion, by not allowing the markets to clear.

    It’s like watching an alcoholic continue to pour more and more alcohol down his throat, believing that he’ll cure his hangover with it.

    Eventually, he overdoses.

    Central banks are following that path…with plenty of cheers from the sidelines.