The contagion will spread to the core, because the core banks are in serious trouble, that will beg the question do governments have enough money to backstop the banks? The simple answer is no. So hence the extend and pretend to allow the core nations banks to re-capitalise quietly. I doubt that they will be successful.
The problem for the US is that it has not reformed the banks enough to protect the US banking system from the reckless speculation on CDS and as a result the US is at significant risk from the collapse of the eurozone.
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The contagion will spread to the core, because the core banks are in serious trouble, that will beg the question do governments have enough money to backstop the banks? The simple answer is no. So hence the extend and pretend to allow the core nations banks to re-capitalise quietly. I doubt that they will be successful.
ReplyDeleteThe problem for the US is that it has not reformed the banks enough to protect the US banking system from the reckless speculation on CDS and as a result the US is at significant risk from the collapse of the eurozone.