exiges Posted January 13, 2012 Share Posted January 13, 2012 http://www.bbc.co.uk/news/business-16544228 Italy's cost of borrowing has fallen at the government's latest bond auction, though some analysts were disappointed by the level of demand. Italy raised its target of 4.75bn euros (£3.96bn) in Friday's bond sale. The interest rate on the government's benchmark three-year bond fell to 4.83% from 5.62% at the last auction at the end of December. On Thursday, Spain raised 10bn euros in a bond auction - twice as much as its original target. The interest rate on Italian 12-month bonds also fell on Thursday after it raised 12bn euros. "After the stellar bill auction in Italy and the very good Spanish auctions yesterday, there will be some disappointment in the market," said Marc Ostwald, strategist at Monument Securities. The three-year Italian bond drew bids worth 1.22 times the amount on offer. At Thursday's Spanish auction, investors bid for almost four times the amount originally offered. Analysts say demand at recent auctions has been boosted by cheap funds from the European Central Bank (ECB). The ECB launched new, cheaper three-year loans on 21 December that were snapped up by eurozone banks, who borrowed some 489bn euros. Quote Link to comment Share on other sites More sharing options...
leicestersq Posted January 13, 2012 Share Posted January 13, 2012 Everywhere central banks are doing the same thing, buying bonds with Central Bank credit. Lots of talk on this about taxpayers being on the hook for the newly created central bank credit. I dont see it in quite the same way. To me, Central Bank credit can be created without an obligation to anyone, it is money not backed by any debt. It may require that that national mint print if that newly created credit turns into a demand for cash. Of course there has to be a balance somewhere, and the balance is that existing holders of the money that is being created by the central bank, are being devalued. As supply increases, price falls, cant get away from the iron laws of economics. I guess that it can work, as long as the central banks dont create too much central bank credit. If inflation were to get going, stopping it might be impossible. Quote Link to comment Share on other sites More sharing options...
Vested Disinterest Posted January 13, 2012 Share Posted January 13, 2012 Could some kind soul explain to me where the 3 year ECB money comes from? I read in the zerohedge post posted earlier that it wasn't printed. Thanks! I wouldn't mind a few grand at 1% to lend on Zopa. Could I take them to court? Quote Link to comment Share on other sites More sharing options...
leicestersq Posted January 13, 2012 Share Posted January 13, 2012 Could some kind soul explain to me where the 3 year ECB money comes from? I read in the zerohedge post posted earlier that it wasn't printed. Thanks! I wouldn't mind a few grand at 1% to lend on Zopa. Could I take them to court? Central Bank credit is created out of thin air. There is no balancing obligation as far as I can see. It isnt printing, but it is money creation. The Central bank can use this money to buy duff assets for top Dollar (or Euro) off of banks transforming them into solvent organisations. Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted January 13, 2012 Share Posted January 13, 2012 http://www.bbc.co.uk/news/business-16544228 Italy's cost of borrowing has fallen at the government's latest bond auction, though some analysts were disappointed by the level of demand. Italy raised its target of 4.75bn euros (£3.96bn) in Friday's bond sale. The interest rate on the government's benchmark three-year bond fell to 4.83% from 5.62% at the last auction at the end of December. On Thursday, Spain raised 10bn euros in a bond auction - twice as much as its original target. The interest rate on Italian 12-month bonds also fell on Thursday after it raised 12bn euros. "After the stellar bill auction in Italy and the very good Spanish auctions yesterday, there will be some disappointment in the market," said Marc Ostwald, strategist at Monument Securities. The three-year Italian bond drew bids worth 1.22 times the amount on offer. At Thursday's Spanish auction, investors bid for almost four times the amount originally offered. Analysts say demand at recent auctions has been boosted by cheap funds from the European Central Bank (ECB). The ECB launched new, cheaper three-year loans on 21 December that were snapped up by eurozone banks, who borrowed some 489bn euros. Probably who bought them, and what with is more interesting than the price. Quote Link to comment Share on other sites More sharing options...
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