ECB opens the floodgates
Wednesday, December 19th, 2007Hot on the heels of the Fed comes the ECB with a massive Christmas present for the markets in the form of a half a trillion dollars……yes that’s right. They are taking no chances of an end of year credit squeeze and have basically opened their doors and said take as much as you need.
It’s probably a sensible step but doesn’t exactly fill one with confidence. This comes as Moody’s prepares to downgrade another $175bln worth of collateralized debt obligations (CDOs). At least the US and Europeans are singing from the same hymn sheet here. Liquidity must be maintained at any cost.
The question for all us is what that cost turns out to be.
