The U.S. Bails Out A Profligate EU

[MorningSong]

While our attention was elsewhere...as usual:


Posted 09/16/2011 06:38 PM ET

Bailouts: Treasury Secretary Tim Geithner was dispensing advice in Europe Friday as the Fed began printing massive amounts of money to bail out the EU. Our government seems more worried about Europe than the U.S.

With Europe on the verge of another financial crisis, the Federal Reserve and European officials announced a three-stage "liquidity" program under which the U.S. central bank will supply dollars so Europe can buy its own bonds and keep the region's economy from going under.

Geithner and the Fed are doing in Europe just what they did here: printing huge amounts of dollars and using them to buy public debt, a kind of mega-stimulus.

This may stave off a collapse of Greece, or Italy, or Spain, for a while. But ultimately, it will fail. After the default of Greece and one or two other fiscal wastrels, the euro zone could collapse — with disastrous results.

Why? This mega-stimulus fails to address the euro zone's actual problem — just as $3 trillion in "stimulus," TARP and Quantitative Easings I and II in the U.S. failed to address our problem: too much debt from too much spending.

In 2007, the euro zone's public debt was a high but manageable 66%. Today, it's 88% — and rising fast — in the danger zone for mass defaults. "Europe is in danger," warned Polish Finance Minister Jacek Rostowksi last week. "If the euro zone breaks up, the European Union will not be able to survive."

In that context, our actions in fact amount to a bailout not only for European Union banks — but also our own.

As columnist Robert Samuelson notes, "Europe accounts for about 22% of U.S. exports. It provides perhaps an eighth of the foreign profits of major U.S. multinational firms. U.S. banks and investors would suffer losses on their European loans and investments."
And that doesn't include the $658 billion lent to Europe by large U.S. money-market funds.....

....continued at:

http://www.investors.com/NewsAndAnalysis/Article/585124/201109161838/US-Bails-Out-A-Profligate-EU.htm?src=SeeAlso

[GCS1103]

While our attention was elsewhere...as usual:


Posted 09/16/2011 06:38 PM ET

Bailouts: Treasury Secretary Tim Geithner was dispensing advice in Europe Friday as the Fed began printing massive amounts of money to bail out the EU. Our government seems more worried about Europe than the U.S.

With Europe on the verge of another financial crisis, the Federal Reserve and European officials announced a three-stage "liquidity" program under which the U.S. central bank will supply dollars so Europe can buy its own bonds and keep the region's economy from going under.

Geithner and the Fed are doing in Europe just what they did here: printing huge amounts of dollars and using them to buy public debt, a kind of mega-stimulus.

This may stave off a collapse of Greece, or Italy, or Spain, for a while. But ultimately, it will fail. After the default of Greece and one or two other fiscal wastrels, the euro zone could collapse — with disastrous results.

Why? This mega-stimulus fails to address the euro zone's actual problem — just as $3 trillion in "stimulus," TARP and Quantitative Easings I and II in the U.S. failed to address our problem: too much debt from too much spending.

In 2007, the euro zone's public debt was a high but manageable 66%. Today, it's 88% — and rising fast — in the danger zone for mass defaults. "Europe is in danger," warned Polish Finance Minister Jacek Rostowksi last week. "If the euro zone breaks up, the European Union will not be able to survive."

In that context, our actions in fact amount to a bailout not only for European Union banks — but also our own.

As columnist Robert Samuelson notes, "Europe accounts for about 22% of U.S. exports. It provides perhaps an eighth of the foreign profits of major U.S. multinational firms. U.S. banks and investors would suffer losses on their European loans and investments."
And that doesn't include the $658 billion lent to Europe by large U.S. money-market funds.....

....continued at:

http://www.investors.com/NewsAndAnalysis/Article/585124/201109161838/US-Bails-Out-A-Profligate-EU.htm?src=SeeAlso

Any financial plan that has Tim "Tax Cheat" Geithner's name attached to it, is doomed to fail. He was a key figure in the real estate collapse here in the U.S.

[conk]

It's not really the USA bailing out the EU, is it? Since the Fed is made up of private European entities, aren't they bailing themselves out using our money?

[norman]

I think they are only playing for time. They just want to keep everything up and running long enough to get all their Ducks in a row.

[Maia Gabrial]

I think they are only playing for time. They just want to keep everything up and running long enough to get all their Ducks in a row.

And you know what happens to ducks in a row...? That's when they're fired at... :heh:
On a positive note: They're going to be busted big time...

[Operator]

I hear a few themes return again and again recently that add up

- Green Span stating that the US can handle every amount of debt because they can print as much money as they like
- ECB does not have that freedom of printing money
- the amount of money needed for bailouts seem endless

So it looks like the FED took over the role of ECB to keep things going for as long as it will last ...
I guess it can't last that long ... so what's in store and how long do they need to keep their pants up ?

[Martin]

Well, I am certain they just want to make sure that all knots are extra tight when the ship starts to break apart and the US (the FED) really needs someone willing to take their money. Madness as usal.

Total bankruptcy will be officially declared when enough money was transfered from bottom to top and when the living standards are low enough or we just end this silly system. The message slowly is getting around. If the people will understand it at all or soon enough ... I dunno.

Martin

[WhiteFeather]

They are trying to stuff 3 lbs. of horse dung into a 2 lb. bag. And The bags about to break open.

[Martin]

Now that is pictorial!


Martin

[Maia Gabrial]

Great visual, WhiteFeather! I'm going blind...

[davyj0nes]

I think it would be wise to remember that an editorial is basically an opinion. Interestingly enough, the editorial does not name an author. So here we have an opinion piece, with no author on a suspect website. I would strongly caution anyone against taking this as true and fact.

[jcocks]

If I've read things correctly recently on this subject, I don't think the EU leaders really want a bailout by the US fed.....

[mosquito]

Surely the USA of all places is in no position to bail anyone out !!

[MorningSong]

@ davyjOnes: Can you prove that this info is NOT correct or true? Your skepticism is obvious.

Have you tried to research this info?

I have, for what the internet may provide and my available time, and this is what I have come up with...the rabbit hole getting deeper and about to cave in, but I guess we all knew that, didn't we?

I agree, that it seems preposterous that the US would have the gall to print more money, make more debt to bail out the EU...but hey, it wouldn't surprise me as nothing does surprise me anymore. And yet, the US in conjunction with other nations are readying a possible plan to do just that, to bail out the EU. I don't claim to understand these articles or finance for that matter.... I just try real hard...maybe too hard...


"The European Central Bank – in co-ordination with the US Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank – will "conduct three US Dollar liquidity-providing operations with a maturity of approximately three months" to distressed European banks, it announced Thursday."

By Ben Traynor
Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

http://www.marketoracle.co.uk/Article30459.html


"Global central banks, with the ECB at the head, attempted to bailout the European financial sector on Thursday announcing a psychologically important injection of U.S. dollar liquidity. Despite fueling a risk-on rally that lifted the euro, “concerted measures by global central banks to facilitate USD funding in Europe are likely to prove only a temporary relief to the euro” as “market worries have not been properly addressed,” according to Barclays."

Agustino Fontevecchia, Forbes Staff

http://www.forbes.com/sites/afontevecchia/2011/09/16/how-to-hedge-a-sliding-euro-on-a-failed-liquidity-bailout/


By Javier E. David

NEW YORK -(Dow Jones)- Five of the world's largest central banks coordinated efforts Thursday to lubricate Europe's banking system with dollars, a dramatic move that sent the euro surging on expectations that financially-strapped banks may avert a long-feared liquidity crunch.

In concert with the Federal Reserve, Bank of England, the Bank of Japan and the Swiss National Bank, the European Central Bank announced a move to pump dollars into European banks.

http://online.wsj.com/article/BT-CO-20110915-715296.html

And if you would rather read a bloggers opinion on the state of things, here's one I could recommend:

http://emsnews.wordpress.com/2011/09/15/g8-nations-join-federal-reserve-in-eu-trillion-dollar-bailout/

This is from her "About" page:


My grandparents were astronomers, my parents were astronomers, too. I grew up in a number of observatories after being born at Yerkes Observatory in Wisconsin. My father had another life: he was an OSS officer in WWII in charge of the rocket program, namely, going deep into Germany to bring back the scientists, rockets and blueprints in April/May 1945. He has been advisor to more than 5 Presidents and I grew up, seeing things from very close up. Including all the goofy, stupid, dangerous and demented things adults do when they want to control the Planet Earth and of course, all those pesky peasants who give rulers endless trouble. I think that the rulers in America have chosen to destroy themselves and this nation and we are now set on a course of destruction. Financially, ethically, psychologically, and religiously, we are going into what I call the ‘Cave of Wealth and Death’ because we want to be rich and powerful, not happy and healthy and free. The chains of wealth pull us into the grave. I believe in Life, not Death. I believe that the only real thing we possess is our souls and this is by far, the most precious thing.

[Mark]

They're trying so hard to make it seem like it's not another bailout. LOL They don't want the American people to revolt yet. Everything will be flushed down the tube IMMEDIATELY if Americans started to think that we were about to bail out all of Europe and half of us don't even have jobs. It's sleight-of-hand. It's not immediately obvious that if something goes wrong and the Euro crashes, which is quite possible, the American tax-payers will indeed have to foot some of the bill as those dollars invested are going to be shuffled back into treasury bonds, as the back and forth, up and down, look at this hand while I slap you with the other game continues.