Don't Worry About Target2

Thu, 06/14/2012 - 02:16 EDT - Seeking Alpha

By Felix Salmon: Moody's just slashed Spain's credit rating three notches - a clear sign that the bank bailout, even though it hasn't happened yet, is being seen in the markets as decidedly deleterious for Spain's creditworthiness. Spain's 10-year bond yield is now 6.75%, up from less than 5% in early March, and approaching the levels at which market access shuts down entirely. Worries over the future of the euro are back - and, like clockwork, whenever those worries appear, people start talking about Target2.Last week, George Soros warned about the "the Bundesbank's claims against peripheral countries' central banks within the Target2 clearing system;" Wednesday, in the NYT, Hans-Werner Sinn says that the Bundesbank is owed $874 billion in Target2 money by Europe's periphery. "Should Greece, Ireland, Italy, Portugal and Spain go bankrupt and repay nothing, while the euro survives, Germany would lose $899 billion," he writes.Meanwhile, in a recent report,Complete Story »

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Don't Worry About Target2

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