Seeking Alpha

Christopher Mah...'s  Instablog

Christopher Mahoney
Send Message
I spent eight years at Bank of America in New York (1978-86) covering Wall Street, then moved to Moody's Investors Service where I worked for 22 years, covering banks, sovereigns and corporates. I chaired the Credit Policy Committee for four years. I retired in 2007 as vice chairman. PLEASE... More
My blog:
Capitalism and Freeedom
  • Today's Fed and ECB announcements mean nothing 0 comments
    Nov 30, 2011 8:23 PM
    So, the Dow index is up by over 700+ points this week. This is certainly a market that has been impatient for good news. What was the good news?
    1. Reports of a Paris/Berlin plan to organize a fiscal stability pact for the eurozone without the need for a treaty.
    2. Reports of an $800 billion IMF bailout plan for Italy, since denied.
    3. Establishment of large dollar swap lines between the Fed and the ECB.
    4. Lower collateral haircuts at the ECB.

    The Paris/Berlin plan is intended to lure the ECB into bailing out Italy; that won’t happen. The IMF bailout of Italy was a false rumor. The Fed/ECB moves announced today are plumbing adjustments which mirror their actions after the Lehman bankruptcy. They are routine and easily predicted.

    The dollar run on the eurozone has squeezed the banks; these steps should make it easier for eurozone banks to meet their creditors’ demands. It won’t stop the run. There is nothing in this package for Italy itself, only its banks. So, as the police like to say, nothing to see here folks.

    I would venture to say that, later this week, the harsh reality will sink in, and the markets will lose their euphoria and give up their gains. At present, there is nothing standing in the way of a major Italian funding crisis.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Themes: eurozone
Back To Christopher Mahoney's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.