I don’t think anyone was quite expecting the wild upswing across major market ETFs this week. While some might be tempted to latch onto a perceived momentary equity run-up, there are far too many telling signs of impending doom that suggest otherwise.
The central bank coordination to provide the European banking system with much needed liquidity was a necessary step to reduce the likelihood of a credit crisis for the time being. Yet, that doesn’t detract from the fact the Eurozone is in dire need of outside funding, whether that comes from the IMF or individual countries. Failed attempts to increase EFSF firepower and to drive down bond yields alone highlight the major stress on the Eurozone’s public and private finances, which has serious ramifications on a global level.
The video below from the Financial Times addresses the deep-rooted problems in Europe with regards to banks and threats to solvency despite this week’s liquidity infusion.