From City AM:
Q: How does the bailout work?
A: The funds can only give money to governments, not banks. That means the Spanish government will take the bonds and pass them on to the banks. They will then pass them to the European Central Bank in return for liquidity, solving their current problems.
In case that's not clear, they add a helpful flowchart:
What's the point of that then? The EFSF/ESM and ECB are all more or less the same thing (they can pretend as much as they like that they aren't). So don't they just give the "liquidity" (whatever that is) straight to the Spanish banks?
Crawling for beginners
44 minutes ago
5 comments:
To prop up the illusion that the EFSF/ESM and the ECB are not one and the same thing? Videre quam esse!
To reflect both accounting reality ("Europe is bailing out Spanish banks") and legal fiction ("the organisations are separate and can't bail out private institutions"). Which strikes me as a better way of doing things than spending years pissing about with laws and treaties.
10 Print Money$
20 Goto 10
hehe
Careful, SB. If you type "run" you might crash the economy!
I think it's the assumption behind High frequency "trading" algorithms.
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