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On September 10, Goldman Sachs analyst Richard Ramsden called banking slowdown structural, not temporary. "The operating environment is unlikely to change any time soon," he said.
Morgan Stanley calls the global economy a "twilight zone" of uncertainty. Graham Summers has been spot on in past analyses. He calls so-called "unlimited" ECB bond buying "Super Mario's big bluff."
Market euphoria is based on his scheme and hope that ESM can work. Mario's plan replicates what he tried before that failed. Repackaging failure under a new name won't turn out better than before. It's old wine in new bottles gone rancid.
Conditionality is involved. Bailout help requires austerity. Imposing it negates "unlimited." Mario's plan is more bluster than bite. Spain and Italy reject it. Greece also balked. They want unconditional aid.
It's not automatic. Troubled nations must apply for it. EFSF funds will be used. With around 65 billion euros left, they're severely depleted. Spain and Italy are required to supply 30% of its resources.
How can they in effect bail themselves out? Draghi has good reason for concern. He's not sure what to do that works.
Neither does Bernanke. Hope springs eternal for QE III. Expect Super Mario bluff 2.0 instead. Bernanke's running out of bullets. Rhetoric has a short shelf life. It only reassures short-term.
St. Louis Fed president James Bullard said he's worried about central banking's future. His hoped for light at the end of the tunnel hasn't arrived.
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