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This is an extension of credit to those CBs which functionally allows them to borrow (and thereby also get ‘short’) USD, presumably to fund their local USD needs for their institutions short USD, and presumably to cover losses on their USD financial assets and to finance the remaining balances.

The ECB has no USD to fund its member banks, and is not inclined to sell euros and buy USD as, at a minimum, a matter of ideology.

This is not a good sign for the eurozone banking system solvency, though the size is modest, at least for now.


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8 Responses

  1. Warren its been a long time since I read my history books, but back before and after ww1 – why was folks getting so antsy about germany and her inflation and repaying her debts? Why didn’t they just let germany’s debts expire? Maybe then that wouldn’t have given rise to hitler and all that death – like today – I want all my debts to expire – that loan I just took out for my big house and car and that million dollar yacht I am gonna use to come see you in the Virgin Islands and that 3 million I just borrowed for that beach bungalow next to you on the islands – If they don’t let my debts expire I may get real mad you know – I want it for free.

    “The ECB has no USD to fund its member banks, and is not inclined to sell euros and buy USD as, at a minimum, a matter of ideology.”

    So why are we agreeing to inflate here and hurt the US middle class who need that US dollar to be valuable so they can buy expensive european vacations?

    “This is not a good sign for the eurozone banking system solvency, though the size is modest, at least for now.”

    I am sick and tired of going to disney world and all that is there is a lot of asians and europeans who don’t even speeak english – where is Joe Six Pack american that Mr. Walt Disney designed the park for? He can’t afford to go see mickey mouse with his kids anymore. I see lotsa germany and japanese people there, walt disney lived through ww2 – I wonder what his dead ghost thinks about the children of ww2 american vets not being able to afford disney, but the children of ww2 german and japanese vets having all the fun?

  2. Warren if I read things right, da gubbment adding 90 billion today – sterilized? How much was added after 9/11? I keep thinking about this show I watched on the great depression, and this millionaire who avoided the initial big crash in the last quarter of 29 thought “hmm now is a good time to buy stocks” so he bought them all and a few years later he was waiting tables in a NY restaurant – a millionaire was a big deal back in 1929 – not like today where there are millions of millionaires – I remember he said something like the fed couldn’t monetize faster than credit was expiring. If only we had you in washington – have you took the plane to D.C. yet?

  3. Warren,

    Any chance you might be a conspiracy theorist? Some press today suggested the following: Could the gov’t have abolished the uptick rule a year ago to promote this wave of shorting, only to scoop up assets cheaply, then trap the shorts and change the rules on them in the middle of the greatest bear raid we’ve ever seen, rest of the economy be damned as an unintended consequence because of the liquidity/subprime issues? Is naked shorting as huge a problem as the media would have us believe, especially with tiny companies??

    Thanks,

    Rob

  4. Hush child – the cia jackals will kill the dissenters! my trader friends said the fix was in last year when they removed the uptick rule and they all went short – you didn’t join the partay? Sucks to be you. Now I want to ask you a serious question – at what point are you willing to pick up a gun and do something citizen? How bad will it have to get before you are willing to lay your life on the line? I am betting me and my cia jackal friends can throw your baby under a bus and you will not lift a finger against authorita. By why do anything that drastic? We can slowly bleed and suck you dry.

    Jefferson talked about his ages ago – it aint a new meme.

    http://mwhodges.home.att.net/quotes.htm

    24. “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
    ” Thomas Jefferson – letter to the Secretary of the Treasury Albert Gallatin (1802).

    A great read on what has gone wrong:

    http://www.rgemonitor.com/financemarkets-monitor/253292/snake_oil_and_deflation

    And another great read on warren, mr. masters on those other “pirates of the carribbean”

    http://blog.mises.org/archives/003362.asp

    Rob Kirby has written in a recent essay Pirates of the Carribbean that, as the long-suffering members of the US debt crack dealers are tiring, Carribean hedge funds are starting to show up as major purchases of US Treasury debt. You can read the article for details, but the main thrust of it is that the numbers don’t add up. Hedge funds cannot be buying as much debt as would be needed to make the balance sheet add up, and if they were they would be losing staggering amounts of money as long rates rise.. The only player in the game with the capacity to absorb the scale of loses is the central bank. Kirby writes: “One might surmise that a printing press would be required to come up with that kind of cash on such short notice, ehhh?”

  5. Warren if I read things right, da gubbment adding 90 billion today – sterilized? How much was added after 9/11?

    the size of fed repos is of no economic consequence whatsoever. it’s about price, not quantity. lots of previous posts on this

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