Wednesday, March 14, 2012
The Eurozone is not yet out of the woods, since the fundamental problem of bloated government spending has not been fixed, but liquidity conditions in the Eurozone financial markets continue to improve, as the chart above attests. Without liquidity, financial markets become frozen and can't carry out their role as a shock absorber for the real economy. Liquid markets, however, can deal with seemingly intractable problems, and that is a necessary condition for a long-term solution to Eurozone problems. So far, so good.
Posted by Scott Grannis at 8:31 AM