Wednesday, August 10, 2011

We Need Bigger Money....................

Fundamentally, the European Central Bank’s $440 billion bailout fund is barely big enough to handle Greece, Ireland and Portugal. It would gorge itself on Spain, choke on Italy and die on France.
That’s bad news for the European banks that bought all that European government debt.
It’s even worse news for U.S. money market funds, about half of whose assets sit in European bank debt:

Unfortunately for those holding U.S. money market funds, France is the largest single recipient of those funds’ interest.
“Financial repression” makes even the “safest” of assets like money market funds a gamble... and events on other continents could trigger an epic crisis here at home.

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