TARGET2 is the acronym for the European payments system, designed to lubricate intra-euro trade with cash. It has now become a diabolical self-perpetuating machine for financing capital flight, as well as Germany’s nightmare.
You might have been wondering how the banks of Greece, Spain, Portugal, Ireland and Italy have been funding the massive capital outflows that have been going for a year or so now, as their citizens employ the inexorable logic of the bank run: that is, the more other people take their money out of the country the more rational it is for you to do the same. Well, it’s easy – in fact it happens automatically, no forms need to be filled in, and in central bank funds what’s more.
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