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Tuesday, December 18, 2007


ECB injects $500bn

it's an unfathomable number to put behind coordinated liquidity injections. it's beyond large. and it won't help in the end.


Impact of the ECB's move on the US yield curve was negligible. The short end of the curve actually rose a couple of basis points. Banks in the US are continuing to hoard cash.

because, as has been noted, this is a solvency crisis, not a liquidity crisis (though liquidity has certainly been one of the casualties). banks cannot borrow their way into capital-strong positions, and bank undercapitalization is the core issue.

what it likely will do, however, is push a boom into equity bids between here and year-end. welcome to your santa claus rally -- i hope.

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