In global financial markets, the signals have changed from green to red. But rather than a simple traffic jam, a full-scale credit crash may be ahead.
Eurozone's financial contingency plan is trying to solve the problem of excessive debt with even more debt.
The Greece package is aimed at rescuing foreign investors and delays the inevitable "rolling crisis" in that country
Confidence in the dollar is what's kept the US going despite the twin deficits. But that's fast eroding.
Central banks are underwriting the credit risk with public money but without any level of transparency. Traditionally, only government securities are eligible for discounting. A fundamental principal of the discount window is that it is designed to provide short-term liquidity against instruments of unimpeachable credit quality. The regulatory spin is that this is "temporary" "in the light of market conditions" and "recognises innovation in the market".
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