When banks and government/s make a mad rush to roll over debt and refinance through the ECB and bond markets; this all point to one thing, money is in short supply and the question will be who gets favored for a 'roll over'? Banks or government? This just means liquidity will be sucked out of the macro economy via higher funding costs ( passed on by banks) ,which means we will all be paying more for finance, which means expansion/recovery get's KO'ed, and if a trillion dollar liquidity crunch is the number and the epicenter is Europe: a huge shitstorm is brewing (using China as they final smack-down)
"Their concern is that banks hungry for refinancing will compete with governments — which also must roll over huge sums — for the bond market’s favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.
“There is a cliff we are racing toward — it’s huge,” said Richard Barwell, an economist at Royal Bank of Scotland and formerly a senior economist at the Bank of England, Britain’s central bank. “No one seems to be talking about it that much.” But, he added, “it’s of first-order importance for lending and output.”
Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe."
from: NYT 11th July 2010
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