« on: June 01, 2012, 04:18:30 AM »
Oh boy!
Time Bomb? Banks Pressured to Buy Government Debt
Published: Thursday, 31 May 2012 | 2:42 PM ET
By: Jeff Cox
CNBC.com Senior Writer
US and European regulators are essentially forcing banks to buy up their own government's debt—a move that could end up making the debt crisis even worse, a Citigroup analysis says.
Regulators are allowing banks to escape counting their country's debt against capital requirements and loosening other rules to create a steady market for government bonds, the study says.
While that helps governments issue more and more debt, the strategy could ultimately explode if the governments are unable to make the bond payments, leaving the banks with billions of toxic debt, says Citigroup strategist Hans Lorenzen.
"Captive bank demand can buy time and can help keep domestic yields low," Lorenzen wrote in an analysis for clients. "However, the distortions that build up over time can sow the seeds of an even bigger crisis, if the time bought isn't used very prudently."
"Specifically," Lorenzen adds, "having banks loaded up with domestic sovereign debt will only increase the domestic fallout if the sovereign ultimately reneges on its obligations."
The rest is here:
http://www.cnbc.com/id/47633576Damned if you do, damned if you don't . . .
We're going full throttle into the iceberg field.
Logged
"Timid men prefer the calm of despotism to the tempestuous sea of Liberty." - Thomas Jefferson
"All you have to do is look straight and see the road, and when you see it, don't sit looking at it - walk!" -Ayn Rand
"Those that trust God with their safety must yet use proper means for their safety, otherwise they tempt Him, and do not trust Him. God will provide, but so must we also." - Matthew Henry, Commentary on 2 Chronicles 32, from Matthew Henry's Commentary on the Whole Bible
"These anti-gun fools are more dangerous to liberty than street criminals or foreign spies."--Theodore Haas, Dachau Survivor
Chase her.
Chase her even when she's yours.
That's the only way you'll be assured to never lose her.
