The ECB and the Eurozone Crisis: The Role of a Lender of Last Resort (LLR)
As those lines are being drafted, the ECB announced – under its new leadership – a reduction in its interbank lending rate by 25 bps. The EU and the US markets seemed to like it, in the midst of the Greek political and economic developments. It is widely expected that...On the EU’s Substitution Effect: Haircuts and Market Realities
We have the feeling that we needed a surgery and we got a counseling session. The “landmark” deal announced in the early morning hours (EU time) yesterday, is full of uncertainties and ambiguities. Moreover, it seems that is another band-aid that seems to kick the can...The Abyss of a Credit Freeze: EU Imbalances and the Enigma of Market’s Exostosis
An abnormality (exostosis) has been developing in the markets that involves an a priori assumption that the EU will solve its debt and banking problems. On the surface it seems that this exostosis is benign and can be fixed with the expected enhancement of the EU’s...Does Money Matter? Blowing (Bubbles) in the Wind
The late Milton Friedman used to ask his students at the University of Chicago whether money matters. Of course, the classic answer that he was expecting from them was: “Only money matters!” Whether someone subscribes or not to this strict monetarist view, the...Sign Up for Our Publications
