"As machines have replaced people, and speed has replaced capital, the ability of the market’s liquidity providers to process complex information may lead to surprisingly large drops in liquidity when the next crisis hits."
Consumers are now more likely to pay off their mobile phones than their cars. Rather than alert the automobile debt backed security market, it has bond buyers demanding more paper backed by mobile phone contracts.
The Italian crisis is far from over and the concept of their 'mini-BoT' parallel currency is throwing up some very red flags about the future of the European Union... You just have to know where to look.
My conclusion – for what its worth – is the Draghi Put, the threat of Italian instability contaging other states, and the maintenance of the European dream at any cost, mean Italian bonds look cheap because the ECB has to act.
It's a risk-on mood around the world, as China makes an unexpected trade concession by slashing auto import tariffs to 15%, while the Italian bond rout is taking a break, leading to a sharp rebound in the euro as the dollar slides.
While the euro crisis seems far away as all Eurozone countries ran government deficits below 3 percent of GDP, there is one problem for the euro that quietly keeps growing: the unresolved banking crisis. And this is not a small problem...