Comments on: Banks, Europe get a reprieve

By: Don Carlos

Don Carlos — Thu, 01 Dec 2011 22:52:45 +0000

Scott says, “The FED is going to load it’s balance sheet up with euros. I don’t see how this is a risk free deal as our betters are saying.”

I don’t want to pull a Ron Paul here, but I am afraid the Fed is not accountable, not to us citizens and not to the other branches of gov’t. It is independent, and it prints money. It uses that new money to “load it’s balance sheet” with whatever that new money is used to buy, pig ears or euros or whatever.

One must not overlook the important role of bank regulators either. They set the criteria (capital ratios, blah blah) which define whether commercial banks are or are not viable. And can declare them not viable, Blam!, just like that.

At this point in time, the most powerful folks on the planet are the Central Bankers.

Scary.

By: Don Carlos

Don Carlos — Thu, 01 Dec 2011 18:13:53 +0000

For a different take:

http://www.cnbc.com/id/45510228

By: Scott

Scott — Thu, 01 Dec 2011 17:23:46 +0000

The gist of this is that the Federal Reserve is swapping dollars for euros. The FED is going to load it’s balance sheet up with euros. I don’t see how this is a risk free deal as our betters are saying.

For one, there’s been some discussion recently that the euro may not survive. Or if it does survive, Germany and France may kick out the PIIGS.

What happens to the value of the euro if the euro disintegrates or if the EU breaks up and kicks out the profligate spending PIIGS? It seems to me there’s a non-trivial possibility that when the time comes for the FED to close the trade and swap the euros back into dollars, those euros could be worth less than they are currently.

By: Don Carlos

Don Carlos — Thu, 01 Dec 2011 16:30:52 +0000

The European crisis is truly the Big Story before us. But it is analogous to the movement of tectonic plates–ocurring below the surface of understanding of those who will be most affected. It is not understood by the MSM and thus not by the various volks.

There is a great deal more going on than sinister forces driving markets up in order to profit from their declines. This is more about the death by money of European nationalism and nominal democracy.

Interesting is the Central Banks of Canada and Switzerland are in the cabal, but Australia is not.

By: texexec

texexec — Thu, 01 Dec 2011 15:23:10 +0000

I’m convinced that most if not all central bankers have decided that the only way to get us out of the financial mess we are all in is to pay off all debt with cheap currencies.

They may not admit it publicly, but that’s what they are doing.

By: expat

expat — Thu, 01 Dec 2011 10:27:39 +0000

From what I’ve been reading, the problem is one of banking liquidity and protecting banks from runs and rumors (think Soros).

By: Parker

Parker — Thu, 01 Dec 2011 05:04:04 +0000

“.. the exuberance by equity markets to a coordinated Central Bank cut in shortterm lending rates to European commercial banks does not make a lot of sense to me.”

For some its purely psychological exuberance. For others its just a matter of driving the markets up and waiting for the markets to fall and make money on the rise and the decline. Based upon true fundamentals its (IMO) insanity. More debt to solve the problem of too much debt is unsustainable. No one can know exactly when the house of cards tumbles, but the big contraction is inevitable.

By: Don Carlos

Don Carlos — Thu, 01 Dec 2011 03:32:34 +0000

I don’t know much about this stuff, but the exuberance by equity markets to a coordinated Central Bank cut in shortterm lending rates to European commercial banks does not make a lot of sense to me. How does this mitigate the intrinsic problems of government spending excess?

By: Curtis

Curtis — Thu, 01 Dec 2011 01:45:32 +0000

Sooooo, the money we are borrowing from China goes to Europe to pay for a defense shield the Russian will target. I knew this was an internal communist squabble.

By: Parker

Parker — Thu, 01 Dec 2011 00:19:36 +0000

Just what what we need most of all at this crucial point; more debt ‘shovel ready’ into the bottomless pit of sovereign (public) debt. I’ll definitely sleep better now that we’ve all been saved for another few weeks by the central banks.