ECB's Trichet begging U.S. to pass rescue plan for the sake of global finance

Discussion in 'Wall St. News' started by makloda, Oct 1, 2008.

  1. Wow, what happened? I thought Dr. Trichet was such an ultra smart and astute 'banker' as all my ET friends have lectured me? Now he's panicking? :cool:


    Oct. 1 (Bloomberg) -- European Central Bank President Jean- Claude Trichet said U.S. lawmakers must pass a $700 billion rescue package for banks to shore up confidence in the global financial system.

    ``It has to go, for the sake of the U.S. and for the sake of global finance,'' Trichet said in an interview in Frankfurt with Bloomberg Television late yesterday. ``I am confident, but of course it is the decision of the U.S. Congress.''

    President George W. Bush and Senate leaders yesterday vowed to revive a plan aimed at buying distressed assets from banks that was rejected by Congress a day earlier. The vote roiled markets already struggling to cope with the collapse of Lehman Brothers Holdings Inc. European governments have helped rescue at least five banks since Sept. 28, with Trichet taking part in talks to save Belgium's Fortis over the weekend.

    Trichet said a pan-European approach to the banking crisis was unlikely, saying ``we are not a fully-fledged federation with a federal budget.''

    ``Each country has to mobilize its own efforts,'' said Trichet. ``But of course there is a European spirit and that is the spirit of the single market.''

    Trichet declined to answer questions about ECB monetary policy before tomorrow's interest-rate decision. All 58 economists surveyed by Bloomberg News expect the central bank to keep its benchmark rate at 4.25 percent.

    Clear Message

    U.S. stocks plunged after lawmakers rejected a proposal that would give the Treasury broad power to buy mortgage-backed securities saddling investors and financial institutions with losses. Banks have recorded $588 billion in writedowns since the start of last year.

    ``I think the message from the markets yesterday was clear,'' Senate Republican leader Mitch McConnell said on Sept. 30.

    Stocks rebounded yesterday on optimism the bill will be passed later this week. The Standard & Poor's 500 Index rose 58.35 points to 1,164.74, recouping more than half of the previous day's 8.8 percent plunge.

    European leaders are trying to better coordinate their response to the financial crisis. Luxembourg Finance Minister Jean-Claude Juncker said yesterday he expects to meet with Trichet and French President Nicolas Sarkozy on Oct. 4 to discuss ``a more systematic approach.''

    Trichet's ECB has so far chosen not to follow the Federal Reserve in slashing interest rates since credit markets seized up 13 months ago, injecting cash into their markets instead, while keeping monetary policy focused on inflation.

    Price Stability

    ``What's needed is for us to continue to tell our fellow citizens that we will ensure price stability,'' Trichet said in an interview broadcast yesterday on the France 2 television channel.

    Belgium, the Netherlands and Luxembourg on Sept. 28 agreed to inject 11.2 billion euros ($16 billion) into Fortis, the largest Belgian financial-services company.

    Governments and other authorities have also taken steps to protect the U.K.'s Bradford & Bingley Plc, Brussels- and Paris- based Dexia SA, Iceland's Glitnir Bank hf and Germany's Hypo Real Estate Holding AG. Ireland yesterday guaranteed the deposits and borrowings of six lenders.
  2. moarla


    if the fed would be organiced as the EZB and would the fed have a better chairman over the last 20 years, you think you would be in the same financial storm as you are now?
  3. Hey, NO PROBLEM, we'll pass the bail out, ECB and Euro countries foot half the bill!
  4. Daal


    Rumor is the EU is toast because they dont have the policial unity to have their own $700b fund. next thing you know trichet will be asking to dump assets on the paulson fund. they will do everything so they dont have to lower rates
  5. moarla


    for what lowering rates ???? go study the simplest economic laws...
  6. Dogfish


    The real rumour is that they are looking to announce a combined guarantee of all bank deposits like Ireland did, which would save them from cutting rates. It's playing havoc with the eonia swaps this morning hence the short end drilled whislt the likes of buxl (30yr) are powering to the upside...

    Oh and British banks would actually use a quarter of the 700bil fund as they're entitled to do, it's america's crummy assets they hold anyhow. The rest of the world funded and attended the party organised by the US, the least you can do is take out the empties
  7. moarla


    what should help a rate cut? we dont have a economic crisis like you in the USA (hot air economy :))) )
    we have a financial crisis >> for what a rate cut?
  8. dhpar


    what the f#ck are you talking about?

    in which country mortgages were given to homeless and then presented on international markets as AAA?

    uk pays its own bills too...(even in this crisis).
  9. But Mak, we MUST prevent a second round price-wage spiral at all costs! Even if it means returning to the dark ages.