Draghis Bazooka Is Loaded With Blanks…(SSDD!)

Saturday, March 5, 2016
By Paul Martin

by Phoenix Capital Research
ZeroHedge.com
03/05/2016

European Central Bank (ECB) head Mario Draghi is running out of options.

Back in 2012, the EU banking system was on the verge of collapse. At that time, various European banks were lurching towards insolvency as the senior most-asset on their balance sheets (EU member nation sovereign bonds) plunged in value.

As a whole, the EU banking system is leveraged at 26 to 1. At these levels, even a 4% drop in your asset values wipes out ALL equity.

In mid-2012, Greek 10 year bonds were yielding 10%, Spanish 10 year bonds were yielding over 7%, Italy’s were yielding over 6%, etc.

These yields were the result of EU sovereign bonds plunging in value (bond yields rise when bond prices fall). And between their exposure to EU sovereign nations’ bonds as well as the hundreds of trillions of Euros worth of derivatives trades attached to said bonds, EU banks were insolvent.

Desperate to hold the EU system together, in late July 2012, ECB head Mario Draghi walked out on stage at an investment conference in London, and promised to do “whatever it takes” to save the Euro and the EU banking system.

The whole thing was a giant bluff. We know from insiders who were present at the time that Draghi’s comments were “off the cuff” and that in fact he had “no real plan” at the time he said it.

The Rest…HERE

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