The Federal Reserve's Covert Bailout of Europe

Discussion in 'Wall St. News' started by nitro, Dec 28, 2011.

  1. nitro


    "America's central bank, the Federal Reserve, is engaged in a bailout of European banks. Surprisingly, its operation is largely unnoticed here.

    The Fed is using what is termed a "temporary U.S. dollar liquidity swap arrangement" with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland and Japan. Simply put, the Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (currently 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange ..."

    In computer science, there is a maxim that every problem can be solved by adding a level of indirection. I suspect that lawyers have latched on to this principle and are able to get around the law by adding an intermediate category, by which the [existing] law simply cannot apply.

    In fact, it shows that law can always be broken if there needs to be precedent in order to convict. All you have to do is create a new intermediate concept that doesn't exist to get around specific rules and existing laws and regulations.

    Bernanke understands this "extra level of indirection" to get around the letter of the law all to well, and is abusing the spirit of the law that are on the books when he makes/allows such arrangements. This isn't singularly a problem with the Fed, but any entity that has to be regulated and has clever lawyers that know how to get around existing laws.
  2. nitro


  3. Tim Geithner has built his entire career on this premise. Why do you think Greenspan, Bernanke, Obama, and the bank industry consider him so valuable? Why has the entire administration turned over with the exception of him (and Holder - the Geithner of the DOJ)?
  4. It is evoling like this the Chinese give the United States money. We in turn waste it and what little is left is given to Europe. The banking interests in the Euro are weak at best. By supporting the EU it does nothing more than support a quasi socialist system that breeds complacency. The Chinese want in on the Euro market, plant down some manufacturing and financial services.
    By the US giving the ECB money under the guise of another global financial meltdown is false. The only thing that giving the EU money has done is weaken the US further. The EU will continue to put protectionist measures in place that insulate thier markets and economies. The globalization process is being held back by the EU. Where is Walmart in the EU? Where are other American corperations gaining a greater market share. Boeing should have slammed Airbus many times over but is being protected by the EU. That money that was given to the EU could have been used for infrastructure improvements and technology advances in the United States.

    Welcome to Planet Misery,

  5. Banjo