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Old 09-19-2008, 12:54 PM   #1
EYES WIDE OPEN
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Default The fist clue that the New Amero currency is in the works?

European shares have rebounded sharply after a proposed US government plan to buy billions of dollars of US banks' bad mortgage-related loans.

The UK's FTSE 100 index up more than 8% and in Paris the Cac was 7.5% higher.

Financial stocks gained the most, with Royal Bank of Scotland and HBOS up more than 50% at one point.

Moves to restrict short-selling in the US and UK also helped to reverse steep losses from earlier in the week, with stock markets worldwide bouncing back.

Short-selling occurs when a trader borrows shares from another to sell them with the hope of buying them back at a lower price, thereby profiting from the difference. It has been blamed for the recent sharp falls in some banking shares.

Crisis of confidence

The proposed US government rescue plan comes at the end of a week of almost unprecedented turmoil on world financial markets:

Stock markets in Russia have been suspended for the second time on Friday at the end of a week of wild swings and stop-go trading
The US financial regulator the Securities and Exchange Commission banned short-selling in the stock of 799 financial companies until 2 October
The move followed similar moves by the UK's City watchdog on Thursday
Nervous traders turned on the last independent US Wall Street giants Morgan Stanley and Goldman Sachs on Thursday sending their shares lower
There are rumours that Morgan Stanley is looking for a partner. Reports have cited talks with US bank Wachovia and the possibility that China Investment Corp - China's sovereign wealth fund - could buy a major stake
Central banks around the world have pumped billions of dollars of extra funding into money markets on Thursday to ease the liquidity crisis
Dramatic measures

News of a US bail-out emerged after a meeting with Congress members late on Thursday, when US Treasury Secretary Henry Paulson announced plans to introduce new laws to buy hundreds of billions of dollars of bad debt from banks.

There will be serious long-term damage to the ability of the US to export its way of doing business to the rest of the world.

This, he said, was at the heart of the almost unprecedented malfunction of the banking system, which has caused havoc in world stock markets this week.

"We talked about a comprehensive approach that will require legislation to deal with illiquid assets on financial institutions' balance sheets," he said.

Mr Paulson and Federal Reserve Chairman Ben Bernanke are expected to thrash out the details of the plan over the weekend.

It is thought options under consideration include establishing a government agency that would buy bad loans to allow troubled Wall Street banks to clear their balance sheets.

In addition, a separate pool of money could be made available to insure investors in US money-market funds, which have seen significant withdrawals in recent days.

Reports said Mr Paulson was looking into setting up something akin to the Resolution Trust Corp (RTC), which was formed after savings and loans banks collapsed in the 1980s.

The RTC took over most of the smaller banks in the US at a cost of $400bn - about $1 trillion (£550bn) in today's money - and then tried to sell off their assets.


The cost of such a bailout would probably be higher this time, with bad mortgage debt believed to be around $2 trillion.

Mixed reaction

"It's a relief, it allows for an orderly workout for the impaired assets and it will help the banking sector get back to business," said Hans Kunnen of Colonial First State Fund Managers in Australia.

But BBC Business Editor Robert Peston said that the taxpayer funded bail-out "represents a massive humiliation for Wall Street" and will severely dent the ability of the US to export its way of doing business to the rest of the world.

But an even bigger risk could be a loss of confidence in the American government's balance sheet, he said.

"This could ultimately undermine the dollar, push up inflation even more and raise the cost of servicing debt for the US authorities," our correspondent explained.

http://news.bbc.co.uk/1/hi/business/7624961.stm

The bit in orange seems important. Maybe this is the plan so that they can bring in the Amero currency & save the day......
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Old 09-19-2008, 01:56 PM   #2
Northboy
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Default Re: The fist clue that the New Amero currency is in the works?

I don't know if you'll see the Amero now.

Effectively this would mean a coup de tat for the Canadian financial system as effectively the US would be using Canadian assets to collateralize its debt. (a kind of cosigning). Public assets in Canada are held by the crown, so London would have to agree.

Unfortunately, for the US there may be little more foreign borrowing, the "free lunch" of the present era is coming to an end.
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Old 09-19-2008, 04:26 PM   #3
Gnosis5
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Default Re: The fist clue that the New Amero currency is in the works?

I am not an expert in finances and would like if you would explain a little further about the US using Canadian assets, thank you.



Quote:
Originally Posted by Northboy View Post
I don't know if you'll see the Amero now.

Effectively this would mean a coup de tat for the Canadian financial system as effectively the US would be using Canadian assets to collateralize its debt. (a kind of cosigning). Public assets in Canada are held by the crown, so London would have to agree.

Unfortunately, for the US there may be little more foreign borrowing, the "free lunch" of the present era is coming to an end.
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Old 09-19-2008, 04:32 PM   #4
arcora
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Default Re: The fist clue that the New Amero currency is in the works?

It's the biggest welfare check in the history of the world. And people are cheering it?
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Old 09-19-2008, 04:35 PM   #5
Mark
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Default Re: The fist clue that the New Amero currency is in the works?

Could just the London bankers be cleaning up?
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Old 09-19-2008, 05:03 PM   #6
Andre
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Default Re: The fist clue that the New Amero currency is in the works?

Well, it seems that the Amero is coming. Given the fact that the next President, more or likely will be Obama, therefore making it easier for the other countries to join into a American Union, given his rhetoric that America need to have a more global outlook.
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Old 09-19-2008, 10:03 PM   #7
Northboy
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Default Re: The fist clue that the New Amero currency is in the works?

The Canadian dollar is a resource based currency. That's what gives it its resiliency.

A combining of currencies would create trade at "par". whatever par works out to be. By the principles of arbitrage, that would put the resources that back the Canadian dollar behind the US debt.

I think its moot though as I don't see an amero on the horizon, unless they roll the tanks.
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