End All The Myths – The Demise Of Draghi’s Self-Delusion
by Jeffrey Snider via Alhambra Investment Partners,
ZeroHedge.com
Jul 9, 2016
As it turns out, Mario Draghi is no stranger to blanket promises. In October 2008 as head of the Bank of Italy, Draghi joined Italian Finance Minister Giulio Tremonti in promising “as much as necessary” for Italian banks via a 5-year government guarantee of their bonds. The government standby would be available all the way through the end of 2009, giving Italian banks sufficient time and financial cover, it was thought, to get control in their own balance sheets. On the monetary side, Draghi’s central bank added €40 billion in Italian government bills for use in bank refis against failed collateral for eurosystem liquidity; a telling sum as to the scale of Italian banking missteps.
Suffice to say, it didn’t work.
Not quite four years later, Italian banks were again in a lot of trouble. Joined by their “southern” cousins around the PIIGS part of Europe, the threat was judged universally to be existential to the euro. Despite the massive “money printing” of the LTRO’s earlier in 2012, it still seemed as if Europe was destined for a monetary-themed breakup. And so Draghi made another blanket promise.
The Rest…HERE
