Today is September 15 — three years ago, Lehman Brothers was allowed to do what insolvent companies are supposed to do — fail.
Hence, it is only fitting that five (Intergalactic) Central Banks arranged a massive liquidity operation to banks. There will be “three dollar-liquidity providing tenders before the end of the year in a coordinated move to offset shortages of dollars at European banks and businesses.”
Although this could be looked at as awful news — more economies and banks in such dire straights as to need yet another central bank bailout, moral hazard notwithstanding — the kneejerk response was relief. Dax is up 4%, US futures flipped positive, Dow now up 100.
The key question is the another QE2, or a failed European TARP?
More to come . . .