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Would you pay a savings deposit insurance premium to an inadequately capitalised insurance company?

Events demonstrated that this is just what I and millions of home buyers were forced to do in the USA over the last several decades when we bought Private Mortgage Insurance for our home loans. The problem is that, without having a Central Bank as a willing backstop, the amount of liquid reserves that would have been required to be held to protect against what, in fact, happened in September-October 2008 would be so large that having them in the form of liquid reserves would probably tank the economy all by itself. At least the FED did what it had to do. Now we are seeing the consequences that can result from pretending that neither the reserves nor the willing Central Bank are necessary.

And this is all over €30 billion and being able to maintain the pretense necessary for the existing political paradigm, especially in Germany. Merkel et al need to think very seriously and very quickly just how much the Euro and the Eurozone are worth to Germany as the resulting shit storm is likely to sweep both away, along with who knows what else.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Mar 17th, 2013 at 02:12:44 PM EST
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