Cross Validation on a Lack of Liquidity
More Cross Validation on the unregulated credit based Eurodollar and CASH DOLLAR systemic banking liquidity issue, in particular RMB or CNY/CNH – Quite a while after we started to Natter about it, the analyst below caught on in September 2015, but still MCLOVIN IT.
"Our analysis suggests that there is an emerging Eurodollar liquidity shortage – which extends into wholesale and shadow banking markets – and is exacerbated by currency/maturity mismatch. Investors may have underestimated the degree to which a rising dollar transmits tighter monetary policy across an already misfiring global economy, especially when it is carrying US$10 trillion (+70% since 2008) in offshore Eurodollar debt. From a Chinese (especially) and EM standpoint in particular, it is becoming increasingly clear that the dollar has been “weaponised.” We believe that the Chinese sell-off in foreign exchange reserves and US Treasuries has been more to do with providing wholesale Eurodollar liquidity to its banking system, rather than supporting the peg per se." - Paul Mylchreest at ADM Investor Services International
"Our analysis suggests that there is an emerging Eurodollar liquidity shortage – which extends into wholesale and shadow banking markets – and is exacerbated by currency/maturity mismatch. Investors may have underestimated the degree to which a rising dollar transmits tighter monetary policy across an already misfiring global economy, especially when it is carrying US$10 trillion (+70% since 2008) in offshore Eurodollar debt. From a Chinese (especially) and EM standpoint in particular, it is becoming increasingly clear that the dollar has been “weaponised.” We believe that the Chinese sell-off in foreign exchange reserves and US Treasuries has been more to do with providing wholesale Eurodollar liquidity to its banking system, rather than supporting the peg per se." - Paul Mylchreest at ADM Investor Services International
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