Anyone who doesn't understand that electronically creating $1 trillion (the total of both tranches of EU LTRO=long term refinancing operation ) isn't kicking a huge can into a blind alley, really needs their head looking at.keep the banks going, sure, but even more importantly, gotta keep the 'European Project' going!.....however high the price economically, financially, socially....... ....Buying time..... ...and time got very, very expensive in the last year. Gotta keep those banks operating, gotta keep bailing them out with $1 trillion of LTRO (Long-Term Refinancing Operation) and several $ trillions of QE. Gotta keep them going so they don't lend to businesses, gotta keep 'em going so they can charge extortionate rates of interest on the money they got at 1%, gotta keep them going so they can make unlawful charges on their 'customers' accounts so as to keep them on the bread line and desperate for the kindness of the strangers who run banks, gotta keep them going so they can continue to avoid paying tax, gotta keep them going so they can donate a small percentage of their profits to political parties. Gotta keep them going so they can pay you 0.5% of interest on your life savings when inflation is running at 5%......CAN'T YOU SEE THAT IF WE DON'T KEEP THOSE BANKS GOING THEN IT'LL BE THE END OF SOCIETY AS WE KNOW IT !!!......There is no amount of poverty or deprivation, social unrest or unemployment that is not worth it when you really understand what the banks do for us. We must keep the young out of work, preferably in further education but if they aren't smart enough then, well, maybe we could find SOME work for them if they aren't going to expect a wage and we must 'encourage' the elderly to keep working. A ninety year old is the only one with the 'valuable life experience' to work in our fast food outlets and DIY superstores.----We gotta keep those banks operating or the whole pyramid scheme that our society is built on will collapse..........Italian and Spanish banks have borrowed from the ECB in record quantities and appear to have made sizable investments in domestic sovereign debt because they can make a profit off the difference between the interest rate on that debt and the one percent interest charged by the ECB. This makes a lot of sense; if one of the countries were allowed to default, domestic banks would be dealing with complete economic collapse. Default on sovereign bonds would prove just a trivial piece of a much greater catastrophe. In a closed economy, increasing domestic bank exposure to sovereign debt in order to pull an economy out of a trouble spot makes sense. So long as banks are there to buy up government debt, the government can issue as much debt as it wants and always find buyers. It can even give money to fund people and businesses and that excess money will eventually find its way back through the system as it's pumped through the financial system via saving and lending. Even in an economy with a single currency, currency risk will discourage (though not completely deter) investors (people, businesses, and banks) from putting money abroad. The structure of the eurozone, however, completely eliminates this currency risk, and in fact encourages investors in one country to keep their money in another if its economic prospects are better. And despite currency risk, the prognosis for the euro area—and thus the euro—is so uncertain in the long term that many investors are willing to overlook the currency risk of holding American or Japanese assets because of the assurance that those investments will be worth something someday.
Access Investments-Building Awareness - European Union-ROMANIA
Thursday, March 1, 2012
Kicking a "huge can" into a blind alley
Anyone who doesn't understand that electronically creating $1 trillion (the total of both tranches of EU LTRO=long term refinancing operation ) isn't kicking a huge can into a blind alley, really needs their head looking at.keep the banks going, sure, but even more importantly, gotta keep the 'European Project' going!.....however high the price economically, financially, socially....... ....Buying time..... ...and time got very, very expensive in the last year. Gotta keep those banks operating, gotta keep bailing them out with $1 trillion of LTRO (Long-Term Refinancing Operation) and several $ trillions of QE. Gotta keep them going so they don't lend to businesses, gotta keep 'em going so they can charge extortionate rates of interest on the money they got at 1%, gotta keep them going so they can make unlawful charges on their 'customers' accounts so as to keep them on the bread line and desperate for the kindness of the strangers who run banks, gotta keep them going so they can continue to avoid paying tax, gotta keep them going so they can donate a small percentage of their profits to political parties. Gotta keep them going so they can pay you 0.5% of interest on your life savings when inflation is running at 5%......CAN'T YOU SEE THAT IF WE DON'T KEEP THOSE BANKS GOING THEN IT'LL BE THE END OF SOCIETY AS WE KNOW IT !!!......There is no amount of poverty or deprivation, social unrest or unemployment that is not worth it when you really understand what the banks do for us. We must keep the young out of work, preferably in further education but if they aren't smart enough then, well, maybe we could find SOME work for them if they aren't going to expect a wage and we must 'encourage' the elderly to keep working. A ninety year old is the only one with the 'valuable life experience' to work in our fast food outlets and DIY superstores.----We gotta keep those banks operating or the whole pyramid scheme that our society is built on will collapse..........Italian and Spanish banks have borrowed from the ECB in record quantities and appear to have made sizable investments in domestic sovereign debt because they can make a profit off the difference between the interest rate on that debt and the one percent interest charged by the ECB. This makes a lot of sense; if one of the countries were allowed to default, domestic banks would be dealing with complete economic collapse. Default on sovereign bonds would prove just a trivial piece of a much greater catastrophe. In a closed economy, increasing domestic bank exposure to sovereign debt in order to pull an economy out of a trouble spot makes sense. So long as banks are there to buy up government debt, the government can issue as much debt as it wants and always find buyers. It can even give money to fund people and businesses and that excess money will eventually find its way back through the system as it's pumped through the financial system via saving and lending. Even in an economy with a single currency, currency risk will discourage (though not completely deter) investors (people, businesses, and banks) from putting money abroad. The structure of the eurozone, however, completely eliminates this currency risk, and in fact encourages investors in one country to keep their money in another if its economic prospects are better. And despite currency risk, the prognosis for the euro area—and thus the euro—is so uncertain in the long term that many investors are willing to overlook the currency risk of holding American or Japanese assets because of the assurance that those investments will be worth something someday.
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Europe's banks took up €529bn (£445bn) in emergency loans from the European Central Bank in Wednesday's second long-term refinancing operation (LTRO), taking the total lent to more than €1 trillion.
The LTRO, which offers three-year loans, was the key crisis measure introduced by the ECB's governor, Mario Draghi, last year to stave off the risk of a full-blown credit crunch in the euro area, after he took over from the more orthodox Jean-Claude Trichet.
A day after banks were given the opportunity to bid for the funds, the ECB announced that 800 financial institutions had borrowed a total of €529.53bn, in line with market forecasts.
Analysts said the large number of borrowers suggested smaller banks had been able to tap the cheap loans.
In the first operation, in December, the ECB lent just under €500bn, and the measure was widely seen as critical to restoring calm to financial markets – and patching up the finances of struggling European banks.
However, some economists have warned that the LTRO is storing up huge problems for the future, if the eurozone banks have failed to recover strongly enough by the end of the three-year period to wean themselves off public support.
Investors had warned that a higher than expected take-up of the LTRO could signal distress among eurozone banks. The euro fell slightly after the news.
29 Feb 2012: Michael Burke: The latest fiscal compact treaty allows unelected technocrats to impose any cuts they can get away with across
Greece battered by recession, debt and now unseasonal snowstorms
28 Feb 2012: Meanwhile, a coalition of Greek businessmen implores global financial and political leaders to support the country with the slogan: 'All we are saying is give Greece a chance'
very good column in the FAZ taking a wider view. I've only time to translate the first paragraph.
Renaissance of Prejudice
Perhaps the most depressing side-effect of the Euro-Crisis is the renaissance of national prejudice. European Populaces mercilessly throw national stereotypes at each other, to a degree that one hasn't heard in a long time. The germans are again the nazis (Polite version: the Bismarcks), while southern EU nationalities are lazy and mildly corrupt (Greeks: grossly corrupt). In the media of the member states there is no cliché missing, not to mention the Bar-Room-Level discourse in the internet. Some of the points that are made there remind one of the years between the world wars.
It wasn't to be expected that such a deep-rooted crisis would be handled in the chatty tones of breakfast TV. Nevertheless the raw tone represents a defeat for the EU.
And so on. He does actually make the point that Merkel is handling the diplomacy pretty well, and sees some reason for hope, based on the sensible post-national approach of governments like Tusk's, in Poland.
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