Monday, July 9, 2012

Expect a major bailout of Euro credit by the U.S. Federal Reserve

Default is the only thing that will work in Europe. The example of Iceland is right there for everyone to see.

But making bond-holders take major losses will shake the system in ways that LIBOR manipulation and MFGlobal-style outright theft have not.

Bond confidence must be maintained.

The US major banks "insure" a large chunk of Euro credit. These banks must be saved, so the Euro bubble must be addressed.

Expect a major bailout of the Euro zone by the US Fed.

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