The Thinly-Veiled Fed Bailout Of Europe

TBI ^ | 12-30-2011 | Phil's Stock World

[blam]

The Thinly-Veiled Fed Bailout Of Europe

Phil's Stock World
Dec. 30, 2011, 5:45 AM

The ECB is borrowing U.S. Dollars from the Fed to bailout European banks. And that is in addition to the Long Term Refinancing Operation (LTRO).

However, the "borrowing" is not called "borrowing." It's called a "temporary U.S. dollar liquidity swap arrangement." Yet it is really borrowing because it's going massively in one direction for the purpose of giving the ECB Dollars to lend to European banks, so the ECB can avoid lending more Euros. The ECB doesn't want to tarnish its "inflation fighting" reputation and further devalue the Euro. Instead, the Fed is taking billions of Euros as collateral for the Dollar swap.

As Gerald P. O'Driscoll Jr., former vice president and economic advisor at the Federal Reserve Bank of Dallas, and senior fellow at the Cato Institute, wrote in the WSJ (The Federal Reserve's Covert Bailout of Europe):

"The ECB would also prefer not to create boatloads of new euros, since it wants to keep its reputation as an inflation-fighter intact. To mitigate its euro lending, it borrows dollars to lend them to its banks. That keeps the supply of new euros down. This lending replaces dollar funding from U.S. banks and money-market institutions that are curtailing their lending to European banks—which need the dollars to finance trade, among other activities."

U.S. Banks and financial institutions do not want to lend European Banks more Dollars, and it would look bad for the Fed to do this unpopular lending directly, so the Fed has found an indirect route.

(snip)

[org.whodat]

Yes, and the people of the good old usa will pay for it, 5 dollar a gallon gas is just around the corner.

[mewzilla]

On a related note....

Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

[blam]

The Number One Catastrophic Event That Americans Worry About: Economic Collapse

[rawhide]

So what happens when the value of the euro goes down against the dollar, like it is recently doing, and the US goes to trade the euros in for dollars. Looks like the US will lose boatloads of money in the transaction?

[ronnie raygun]

Now more thanever we need to rally together under one banner, even if we have to hold our noses which I think at this point we probably will, and vote in a landslide to stop the bleeding, remove the obstacles, remove all the agency leeches and commies and start to put the train back on the tracks. Once we do this we can work toward a real conservative candidate in the future. We need to stop this dead in its tracks in November

[Conservative Vermont Vet]

It is far past the time when the Fed and Dept of Treasury should be reigned in and brought under close scrutiny (if not control) by Congress.

What we need is "Transparency" after all, it IS "our" money these, corrupt, "money-changers" are playing with.

Their autonomous and secretive method of operation is inimical to our financial well-being.

Paulson (who was one of W's worst appointments) should be sitting in Leavenworth for heavy-handed, threatening, illegal and un-Constitutional shenanigans he was responsible for with the bailouts and Bernanke, at the very least, should be fired.

[LibLieSlayer]

We already gave (only the Fed and obamao knew) the EU banks 8 TRILLION dollars in the past two years... the audit of the Federal Reserve turned this up a month ago... and yet we still pour chicom dollars into that bottomless pit.

LLS

[mewzilla]

Government of, by, and for the ruling class.

[andy58-in-nh]

Do you wonder daily, as I now do, just how long the ECB and the Fed can conspire to keep this charade going?

If you and I ran our businesses the way the giant banks do today, we'd be in jail - and justifiably so. But banks have a business partner that we don't: government.

And governments have printing presses or rather, today computers that magically generate extra ones and zeroes on asset ledgers that otherwise would be as barren as a feminist's womb.

And all of that magical money finds its way into leveraged investments via primary dealers and keeps the whole Ponzi going until... the next batch of bad debt comes due and must be paid. But current revenue cannot cover such debts, especially when there are year-end performance bonuses to be paid and sweaty political palms to be greased.

"Hello, Ben? I need some more Benjamins. "When? Why, yesterday, of course."

[LZ_Bayonet]

"So what happens when the value of the euro goes down against the dollar, like it is recently doing, and the US goes to trade the euros in for dollars. Looks like the US will lose boatloads of money in the transaction?"

I don't know the official answer to this question. Is it possible that the dollar/euro swap sets a locked-in dollar value for the euros? But, if we had a real media or real conservative politicans in this country, this is a question that should be of concern and should be answered.

[sam_paine]

Now more thanever we need to rally together under one banner,

Nonsense! Haven't you heard on FR?! Only Rick Santorum and Michelle Bachmann are going to replace Geithner at treasury, Jackson at EPA ...Napolitano at DHS and Holder at DOJ.

Otherwise, Mitt/Newt/etc are "EXACTLY THE SAME" as OBAMA!

At least that's what I'm told here.

[LibLieSlayer]

“New World Order”... another progressive bush family agenda.

LLS