Does the ECB actually have any worthwhile amount of money? Or is it effectively just a thinly-capitalized dealer like all the rest of the banks? Is this correct: Its capital is five billion euros which is held by the national central banks of the member states as shareholders. The initial capital allocation key was determined in 1998 on the basis of the states' population and GDP, but the key is adjustable. Shares in the ECB are not transferable and cannot be used as collateral. 5 billion won't get it very far as a 'rescuer'! Where is this new 'cheap' loan on offer to Spain coming from? And where is the other 700 billion euros it has already lent coming from, if the whole EU or world house-of-cards collapses? And how do the shareholder countries actually cough up their share when they are all in debt way over their heads? It looks as if the ECB is as heavily complicit and drowning in the game of pass-the-debt-parcel (aka 'cycle of debt') as anyone! If so, then, for all his regulation dark blue EU technocrat suits, in reality Draghi is just yet another 'emperor with no clothes'! 
Access Investments-Building Awareness - European Union-ROMANIA
Wednesday, December 21, 2011
Questions, questions, questions....
Does the ECB actually have any worthwhile amount of money? Or is it effectively just a thinly-capitalized dealer like all the rest of the banks? Is this correct: Its capital is five billion euros which is held by the national central banks of the member states as shareholders. The initial capital allocation key was determined in 1998 on the basis of the states' population and GDP, but the key is adjustable. Shares in the ECB are not transferable and cannot be used as collateral. 5 billion won't get it very far as a 'rescuer'! Where is this new 'cheap' loan on offer to Spain coming from? And where is the other 700 billion euros it has already lent coming from, if the whole EU or world house-of-cards collapses? And how do the shareholder countries actually cough up their share when they are all in debt way over their heads? It looks as if the ECB is as heavily complicit and drowning in the game of pass-the-debt-parcel (aka 'cycle of debt') as anyone! If so, then, for all his regulation dark blue EU technocrat suits, in reality Draghi is just yet another 'emperor with no clothes'! 
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In Japan overnight, local credit rating agency Rating and Investment Information Inc has cut its rating on Japan to AA+ from AAA. It highlighted inadequate social security reform and an unclear outlook for economic revitalisation. Japan has already been cut by agencies Standard & Poor's and Moody's but this was the first downgrade by a domestic agency.
Banks are refusing to lend to each other and are depositing their money in the central bank. The central bank is then recycling that money by lending it out again to the banks.
The three year loans just save them doing 150 auctions for the same amount of money every week.
And this will continue until the inter-bank lending rates converge with the central bank rate.
It's about price not quantity people. Remember that!
Here is an interesting report.
If we look at Household and Financial Debt in addition to Government Debt, the UK’s Debt to GDP ratio
exceeds 900%. Japan is over 600% and Europe is almost 500% Debt to GDP. The U.S. is over 300%. In
summary, Euro, Japan and the U.S. are drowning in debt.
Of course even this report seems to focus on government debt of many EZ countries. But personally when your debt to GDP ratio exceeds 900% (as is the case for the UK), it seems foolhardy to focus on the rather small debts of Greece and Italy.
Remind me, who is going to pay back the Financial sector debt? The banks??
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