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Image: Sam Beasley on Unsplash
Back in the day, when shepherds and wranglers were frenemies, livestock would graze on politely shared common grass. But common areas, like the microwave in the break room, are left untended by design. If someone doesn't take direct ownership, the soil is overgrazed, the water becomes polluted, the land stops providing, and the spinning glass plate is forever caked in tomato sauce.
The central banks in the Eurozone know that everyone will share the bad risk. Simply, Germany's Bundesbank, which holds a 26.4% stake in the Eurozone, is owed nearly a trillion EUR. If the national bank is in trouble, you can bet commercial bankers have tempered bottle service at least twice per month. Anyone in construction will tell you that operating on very thin margins, essentially buying work, is not sustainable.
At the top of the funnel, commercial banks feed the promises of cash. The government is incentivized to borrow from itself and the smaller economies love that distributed risk.
EUR/USD will open at 1.7754 today.