Does Anybody Who Gets It Believe Central Banks Did All That Much Yesterday?

I’m still mystified as to the market reaction on Wednesday to the coordinated central bank effort at waving a bazooka at the escalating European financial crisis. But as readers pointed out in comments, the big move was overnight, in futures, when trading is thin, and there was no follow through when markets opened. And volume was underwhelming.

The officialdom in the US seems to have been slow to wake up as to the direct effects of the Eurobank wobbles on the US economy. I worked for the Japanese in the 1980s, did some work for the US ops of a major German bank in the 1990s, and the story of big foreign banks in the US is largely unchanged: they provide commodity credit (big corporate lending facilities and acting as participants in loan syndications) as their best route to breaking into more lucrative services at the same companies. So as the Journal noted earlier this week, Eurobank stress is leading to a big crunch on all sorts of lending activities.