The concept of risk and more importantly, loss, continued to twerk away at capital markets this weekend. A $500 million Gold trust investment, sold by ICBC (the biggest player in Street Treasury clearing since Refco blew up) and marketed under the name of Credit Equals Gold received a last minute bailout. The Credit Equals Gold product was another gem in the $1.7T Chinese Trust business and Ultra-Shadow Banking system. The product was going to invest in a coal miner but I guess Credit Equals Coal didn't resonate with the gambling obsessed public.
Money markets squeezed a bit around the globe and equities retreated under various explanations of gravity. The ECB spoke openly of the D-Word and pledged to buy packages of loans to fight the threat. Constrained by mandate from buying government securities (except for the tons they've bought), Draghi opted for the riskier stuff. That is, if you could measure risk, which you can't because losses will not be tolerated.
The Credit Equals Gold bail should remind us all that global monetary policy is blurring the lines between money, credit and capital. In the haze, the 3 distinct entities are increasingly being viewed as the same. Rather than highlight the distinction, policy makers opt for "stability" and continue to hand out "participant" ribbons to all involved. Color us nervous.