The Federal Reserve revealed details Wednesday of trillions of dollars in emergency aid it provided to U.S. and foreign banks during the financial crisis.
I'm surprised that some of the aid was in the form of revolving credit facilities. Using it to support short-term borrowing and corporate paper would be one thing, but was this support also used by European banks' prop trading desks? Inquiring minds would like to know.
Central banks also drank deeply from the well. That explains why foreign buyers of U.S. Treasuries haven't balked at buying enormous new bond issues. They know the "Bernanke Put" in the bond market has supplanted the "Greenspan Put" in equities.
The global financial elite is uniformly terrified of deflation and is willing to let the U.S. lead a headlong charge into renewed asset bubbles. How about that.
We should ask ourselves whether the Fed's new QE2 purchases will first target bond inventory at these same European banks now that the EU is fully engaged in bailing out the PIIGS. There is no reason not to anticipate a repeat Fed bailout if the EU / IMF rescue of Ireland and Greece falters.