Monday, February 27, 2012

More signs of Draghi's "stabilization"

Here is another sign of Draghi's "stabilization". The survey of euro area banks shows material tightening conditions in the banking system (as expected). And this is inclusive of Germany, one nation in the Eurozone that is not experiencing a credit contraction. That means the periphery is in deep trouble.

Net % of banks expecting to tighten loan criteria (source: Capital Economics)

Draghi was able to keep the Eurozone's financial system from the precipice, and he deserves full credit for that. But to claim that he sees signs of stabilization in the Eurozone economy in the face of this data will only serve to undermine the central bank's credibility.
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