http://news.yahoo.com/s/ap/20100510/ap_on_bi_ge/eu_europe_financial_crisis
Somehow this is supposed to strengthen the Euro? I'm not totally sure what it entails, this article is very vague.
discuss
"We shall defend the euro whatever it takes,"
"We shall solve the problem of government spending with MORE GOVERNMENT SPENDING!! Whatever it takes!"
"The Federal Reserve has announced that it will re-establish the temporary U.S. dollar liquidity swap facilities with the Bank of Canada, the Bank of England, the European Central Bank (ECB), and the Swiss National Bank that it first implemented in the early part of the financial crisis. Further details on these arrangements will be available shortly. It appears, though, that for all practical purposes, the Fed has agreed to bailout the world. Essentially, foreign central banks will print up any amount of money they want in their currency and the Fed will print up an equal amount of dollars that they will then loan to the foreign central banks who will then loan the funds to the banksters who will use as collateral the securities of the PIIGs to gain the dollars. Needless to say this is complete and utter madness. It is extremely inflationary on a global scale.What's more, outside of banksters, no one in America will benefit from this move. Every one in America will suffer from the ultimate inflationary consequences. The size of these swaps must be watched very closely. It does not appear that these funds will be stored as excess reserves. This means they will be out in the system. Every $100 billion added to the system in this manner (unless somehow sterilized by money drains elsewhere) will mean an immediate increase of 1.16% in M2 money supply. But this $100 billion would be high powered money. This means the final impact would be a multiple of the intial Fed money creation. Given that the U.S. financial situation is delicate, and the Fed is likley to be called on to bailout the Treasury Department within a short-time, for the U.S. to be a major player in the bailout of Europe is sheer madness. It's the taller drunk holding up the shorter, eventually they will both collapse."
Thanks, viresh. Good to know that we'll be enjoying a worldwide hyperinflation within our lifetimes.
So after searching around it looks as though the 750 billion will be used for loans and loan guarantees to stave off fears of any state defaulting... and the fed is going to match this by making dollars available for this as well.
Now Europe as a whole does not seem to be totally insolvent iirc, their currency just has to lose some of its value due to the expansionary money supply. However the US is truly insolvent, so maybe now that we helped them, they will feel politically compelled to help us when our currency crisis starts. Could this mean that the Euro and dollar are in it together?
I guess it could of already been that way, depending on whether you think both central banks are controlled by the same elite or not.
In any event we can expect this injection of money to balloon upward with fractional reserve banking.
¡Defenderé el peso como un perro!
Ron Paul on fox news business.
http://www.youtube.com/watch?v=5VYUlxyuyo0&feature=popular
Their public relations is incredible, they've managed to completely avoid the word 'bailout' they've convinced everyone they have no other choice, that if the Euro would crash if they didn't do this by calling it a "defense package"
From the PIIGS, thanks guys!
"You don't need a weatherman to know which way the wind blows"
Bob Dylan
Naive question, I'm sure I'm missing something here, but.... what's to stop them from continually bailing out the weakest countries, passing the loans back and forth, forever inflating? I guess the question is, If the entire world inflates together, why does it matter?
Inflation works as long as people expect it to stop. Permanent inflation leads to a loss in confidence in the currency, and a loss in confidence of the supplier, and prices are bid up at an accelerating pace. This is otherwise known as hyperinflation.