Working Keynesian miracles ...

I've been making the case that the European Central Bank's LTRO (long term repo operation) implemented on December 21st has been the main catalyst for the stability and advance of global financial markets in 2012.  Here's two more charts that support that thesis:

The chart above is the Powershares Italian Bond ETF and the incredible run up that coincided with the ECB's LTRO is clearly evident.

Here's a daily chart of the Three Month T-Bill discount rate and you can see that the 3 month rate was scraping the bottom of the chart for most of 2011 as the "fear trade" swung into high gear as investors sought safety in short term U.S. debt because of Eurozone debt woes.

Pumping 489 billion Euros into the European banking system works wonders!  Just wait until February 29th ...