Tuesday, December 18, 2007
ECB injects $500bn
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.