March 24, 2013

CYPRUS IS IMPLODING, so why aren’t markets freaking out? I’m going with this explanation: “Central banks’ massive asset purchases have set up a situation where the markets’ normal signalling mechanisms no longer operate because investors have huge volumes of uncovenanted liquidity, created by the central banks, to commit to long-term assets.” Or, in other words: “We have to have the crisis to find out what’s in it.” Nothing pretty, I predict.

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