Falls under ‘will do whatever it takes’
😉

Greece is in the process of trying to secure funding from Greek local banks to payoff 2.6 bb in Greek Government bonds maturing this month (4.10% 8/20/12) that are owned by the ECB and EIB. The Eurozone turned down a request from Greece for a bridge loan to pay off the maturing bonds. For their part, the ECB rejected a proposal from Greece to delay the payoff until September when Greece hopes to receive its next tranche of funding. However, the local banks have apparently been given approval to lend Greece the funds it needs to pay off the bonds and avoid a default. The Greek banks will then be allowed to use the loans as collateral at the Bank of Greece’s ELA program to secure the funds for the loan to Greece.

 
Again, here is a non-standard measure being considered to fund sovereigns that involves central bank funding, even if it is not directly the ECB’s direct lending.
This is just another example of access to unlimited funding via central banks.

37 Responses

  1. Baffling the Bundesbank with bullshit? 🙂

    although not so dissimilar to us refusing “deficit spending” while allowing unemployment benefits

  2. Utter, utter madness.

    The line seems to be that the only form of funding available is that which passes through the hands of as many middlemen as possible.

    1. @Neil Wilson, How else are the middlemen to be sustained? Then too, their vicarious plunder, like cyberwarfare, is less physically destructive. The problem is that productive enterprise is being stinted of resources and assets in the name of an artificial scarcity.
      Insecure people resort to hoarding and that hoarding produces scarcity, which is exactly the thing they fear.
      How do we counter insecurity? I suspect that’s the function deities serve. God will provide.
      Funny how American fundamentalists have given up on Providence.

  3. I think this may be Syriza’s Treasury policy platform, sort of a “call their bluff” approach, though perhaps by default …. rsp,

  4. I think it requires some desperation to applaud this. So far from putting people to work, and getting their economies growing. Well at least the Europeans aren’t slaughtering each other in a massive military conflict.

  5. So the ECB lends to the Bank of Greece who lends (ELA) to the Greek commercial banks who lend to the government who pays to the ECB. The commercial. Anks will earn big fees in the process, presumably.

    A suggestion to Greece: nationalize the banks and it will mean the ECB lending to “Greece” (BoG plus state- owned banks plus Greek goverment equals “Greece”) to receive the funds back at the end of the chain.

    In other words, a wash. Old debt is settled with new debt that will stay on BoG’s books, never to be repaid.

  6. Also, it’s not so different from the trick of excusing TT&L accounts from the banking reserve process.

    “The Treasury tax and loan account system was designed as a mechanism for minimizing the dislocations on bank reserves and the money market arising out of the sizable and irregular transfers between the Government and the public.”
    Treasury tax and loan accounts and Federal Reserve open market operations
    http://www.newyorkfed.org/research/quarterly_review/1978v3/v3n2article7.pdf

    TTL Note Accounts and the Money Supply Process
    http://research.stlouisfed.org/publications/review/79/10/Accounts_Oct1979.pdf

    Oh what distracting monetary webs we use to hide our real options from ourselves. Can’t see the options for the BS?

  7. We don’t need no stinking glasnost!

    This is yet another small chapter in the great retreat to obscurantism that characterizes the operations of our monetary captains. Is it any wonder that regular folks cannot understand or trust their economic institutions?

    1. @Alan Rhodes, We are FREAKING DOOMED!

      http://www.reuters.com/article/2012/08/10/us-ethanol-united-nations-idUSBRE8790CW20120810

      Reuters) – Global pressure on the United States to relax its ethanol quota mounted on Thursday as the top United Nations food official said an “immediate, temporary suspension” of the mandate could help head off another world food crisis.

      Many people going to starve to death, and they probably think, if I am gonna die, why shouldn’t all those other people go down with me, where is that suitcase nuke? We are FREAKING DOOMED! Where do you hide Mosler when 1 billion starving people start blowing up nukes all over the planet? Everybody dies, roger erickson return on coordination will be but a distant memory meme that even the few remaining lifeforms (cockroaches) have no understing! Doomed! 😉 LOL!

      1. @roger erickson, Wow! What a snake that barton guy was! Thanks for showing me this Erickson! Trying to hide one of the most important lessons that could be learned from history! That even heroes like jefferson, when given too much power would enslave another human being for his own personal gain and do evil and darnkess!

        I hope all here take note with thier own modern day personal heroes, mosler and others included, too much power, and they do evil! Just like jefferson did! You are true patriot Erickson!!

        Erickson, today I saw one of the funniest things I have watched in months, it was danny devito as a revolutionary founding father on his show, sunny in philly, the indians scalped his head, I died laughing:

        http://itsalwayssunny.wikia.com/wiki/The_Gang_Cracks_the_Liberty_Bell

      2. @roger erickson, Y wake up!

        US Senator Bernie Sanders says the rich, and most of warren’s class and many in his peer group are EVIL and will be the TOTAL ANNHILATION of the USA as we know it. Use 13 minutes of your life to listen at what Bernie Sanders said on the Senate Floor is the future: http://www.youtube.com/watch?v=oZ1xa20ldqU

        Class Warfare is here dude, Sanders words, not mine, not everyone can just pick up and move to the islands and get all kinds of 3% tax rate strategies working for them and thier millions and billions, can you Y? Warren can. But for how long? tick tock tick tock….

  8. Warren says the 3% program is open to ALL americans, lets take a show of hands, how many people here can move to the USVI, implement the economic development program, and move thier millions and billions and families to get those 3% tax rates? I hope warren sees how silly that is to even SUGGEST that the USVI program is open to all 400 million americans, that is total garbage and someone has ideaological blinders on. Sure it is open to all of us, but the reality is only a few select FEW can actually take advantage of it in reality, and if he doesn’t seriously acknowledge that, then even as much as I like warren, I will have to say he is being a silly fool. Erickson, Hickey, EMC, SteveK9, do you guys have the resources to move to the USVI, take your millions and billions with you, live there for 6 months out of the year, and get 3% tax rates? Do you think warren is maybe being silly when he says that is an option for all 400 million of us borg! LOL! Y you are so blind, wake up! Warren actually believes 400 million other people can move there and get the breaks he does – LOL! BWAAHA! Sanders is coming for you, tick tock tick tock!

      1. @y, http://therealnews.com/t2/index.php?option=com_content&task=view&id=767&Itemid=74&jumival=4234

        Watch this video Y, it is sony kapoor of “re-define” among other things he talks about how the average bank has 300% more subsidiaries than other institutions of similar size, how financial products are intentionally created to increase complexity and maximize profit on information assymmetry with customers (muppets as zerohedge says), you don’t know if you trade with citibank what subsidiary your transactions are going through, which tax haven, what legal zone, all this complexity is increasing, because the profit motive incentivizes it, one third of ALL GLOBAL economic activity goes through these tax havens, taking more than 500 billion of resources away anually from developing countries, etc etc

        Warren says the purpose of this blog is to illuminate the financial sector is more trouble than it is worth, but then wants people to believe he moved to hurricane alley and makes himself a prisoner there for 6 months out of the year to help 10 USVI people get a job. That is garbage, its those 3% tax rates why he does it. As senator bernie sanders said, he didn’t have ENOUGH, he wanted MORE tax breaks.

        Warren, move to new orleans like angelina jolie did after katrina if you want to move somewhere to help a lot of destitute people, or africa where bill gates goes all the time, donate those 400 acres you have in the USVI to a national park (be proactive – don’t wait on eminent domain from the government to take it from you) Wake up Y! Don’t be a slave your whole life.

      1. @Ed Rombach, Ed, do you mean that joe 6 pack can have access to do as warren does? Thats not what my democrat friends in congress say:

        http://blogs.wsj.com/washwire/2011/12/06/taxing-derivatives-gets-capitol-hill-airing/

        Some lawmakers and witnesses also said that middle-class investors increasingly are able to take advantage of the same tax benefits of derivatives contracts, such as deferral of taxation on investment income. Exchange-traded notes, for example, mimic the economics of long-term securities investments, but can eliminate the need to pay taxes in the interim on dividends or other income.

        In a statement, Finance Committee Chairman Max Baucus (D., Mont.) said that derivatives used to avoid paying taxes “aren’t fair to taxpayers who can’t afford those high-priced lawyers and accountants.” He called on Congress to “clarify and simplify the tax treatment of these financial products.”

        LOL! Poor max baucus, http://www.iinews.com/site/pdfs/DW_1_2012_MF.pdf how is he or middle class joe 6 pack going to understand all this complexity when even derivatives experts, accounting gods, and quant lawyers can’t figure out all this stuff, as the article concludes, there is going to be MASS TAX confusion, and as senator bernie sanders implies, and sony kapoor calls out specifically in his video above, this is BY DESIGN.

      2. @Save America,

        I think we may not be talking about the same thing, but conceptually anyone can hedge their exposure to rising tax rates. All that is required is to have someone market and sell the product to Joe six pack, your average dentist or your run of the mill business executive. Apart from hedging gains to offset rising tax liabilities, it may also be profitable to engage in this type of transaction even if tax rates don’t go up because last I checked there was a fairly robust positive carry out on the forward rates curve.

      3. @Save America, Bernie Sanders says there is a war, sony kapoor says there is a war, a war that is against the people, its actually very easy gibberish to understand. Can you specifically tell me what confused you in the links provided? I thought they were very easy videos to watch and comprehend, where is your difficulty? I will try to assist you. Jefferson had slaves. The takeaway is what ERickson pointed out, we must be watchful, even of good people who pave the road to hell with good intention. Bernie Sanders says to watch out for people that want MORE.

        Here I will ask you one simple question to cut through all your confusions, do you think warren mosler moved to the USVI to help 10 USVI islanders get a job? Or was it to enrich himself through 3% tax rates? I already asked you that once, please answer. Why are you dodging the question Y?

        http://www.youtube.com/watch?v=cAe7SaCAA7Q 30 Trillion in a new report Y, that is more than the combined GDP of the USA AND Japan. That is some serious money Y, even for people easily confused 😉

      4. @Save America, Ed what exactly are you talking about so we can be clear? If taxes are the regulator of demand, a key underpinning to some of moslers ideas and a key tool to keep things functioning since we went off the gold standard, and 30 trillion (that we know about) is outside the system, we have some serious problems. 30 trillion is serious money.

        Warren personally is some of the people that Bernie Sanders is probably talking about, getting 3% tax rates. However even bernie sanders says not all people like warren are evil, just most.

        Let me ask you the question I asked Y, was moving to the USVI and those 3% tax rates something warren does out of the goodness of his heart to help a few islanders find a job, or is he maybe more of the “problem” that bernie sanders talks about with people who just want MORE tax breaks?

        Monica and Neil up above are already critical of the rube goldberg machinations going on that keep many of our brightest minds doing really useless stuff.

      5. @Save America,

        “Let me ask you the question I asked Y, was moving to the USVI and those 3% tax rates something warren does out of the goodness of his heart to help a few islanders find a job, or is he maybe more of the “problem” that bernie sanders talks about with people who just want MORE tax breaks?”

        Good question and frankly I don’t know the inside story, but I do know that Warren is well liked on the Island and I have been told that he is a big supporter of local charities. That said, here’s Bloomberg’s take on it.

        http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avwOz7YrGJLU&refer=home

        Oh and BTW, I am one part MMT, one part Supply Side and one part Austrian, although not necessarily in equal parts, if you can figure that one out. With that perspective in mind, I don’t hold it against anyone who wants to legally reduce their tax liability and all three of these political economic disciplines can find common ground on reducing taxes.

      6. by the way, I always took the interest deduction on my home mtg and the dependents deduction for my kids, and i always deducted my business expenses from gross income before paying taxes, and depreciated plant and equipment as per IRS regs, etc. etc. etc. all of which lowered my tax bill.

        so there

        😉

      7. @Save America, Great article Ed, I love learning history. Notice as the article says that warren must donate to island charities as part of the program. So theres that, but I am ever grateful for the time warren does donate to this blog if I do have differences with him in some other things.

        “I don’t hold it against anyone who wants to legally reduce their tax liability”

        I don’t either, I used to maximize every strategy I could myself, but as kapoor said in the links, and even the new dodd-frank exceptions, the work of many honest well intentioned “actors” trying to maximize tax strategies is having an effect that has now possibly pushed 100 million people in developing countries into death and starvation.

        Notice from the article, warren and a few others coming in pulled the island out of debts, many hundreds of millions in dollars, but that is resources that were not in other more “needy” economies perhaps? That is one of the arguements kapoor is making, 500 billion a year in resources not going to needy people that otherwise would, that is serious money just because of complexity and bad system design.

        The video with the author of the bank secrecy book talking about french families and their trusts, I am sure many of those families feel like they are upright moral positive forces in thier community and good people in this world. However thier collective actions at the macro level is hurting other human beings. As Erickson says, the system needs constant adjusment, it moves faster than it can serve the majority. Greenspan and others engineered this modern monster, saying let the sheeple regulate themselves. Now many real children and humans over the world are dying from this policy.

  9. From Warren to Ryan ….well done America !
    Lest this is some complex trick with the usual subplots and convoluted logic
    that only the very rich and super smart can begin to grasp as the solution to all
    problems ever faced by mankind .

    1. @Save America, Interesting, SA.

      Unfortunately such programs put on by schools, to attract paying students (granted, a few scholarships too) have negligible impact on the mass of actual decision makers and their institutional momentum.

      There’s more REAL innovation going on in actual town councils distributed around the country. If Warren or similar people ever actually get into Congress or adminstration in a territory, a state or DC, you’ll see more impact.

      It’s always easy to find some things to complain about. Instead of complaining, lets meet & see what REAL impact we can actually help implement. If it were easy, you, I or Warren would have been president/dictator/martyr years ago.

  10. Save America,

    tick tock tick tock, low taxes in the vigin islands, Bernie Sanders, class war, trillions in offshore accounts, warren mosler, too much power, the rich, finance, derivatives, warren mosler in the virgin islands, low taxes, class war, catastrophe, war, blah blah blah blah blah, etc.

    See, I can make completely incoherent, meaningless statements too. It’s actually quite easy.

    1. @y, Oh wow! You did a word cloud for me? Lets see what it looks like y 😉

      http://www.wordle.net/show/wrdl/5564815/Mosler

      See where you screwed up Y, BLAH is the most prevalanet word in the word cloud 🙁 I never sah Blah, but the other words are probably appropriate 😉

      But if we link to warren’s main site:

      http://www.wordle.net/show/wrdl/5564826/Mosler2

      GDP, Growth, and Deficits become the most prevalanet word

      And if we link to the Grandfather of MMT talking about Lincoln being the greatest MMTer eva!:

      http://www.heritech.com/ymagchy/mcgeer/conq_05.html

      http://www.wordle.net/show/wrdl/5564843/Mosler3
      We get Lincoln, Money, Currency, Government

      Y what a great idea! Word clouds are fun! 😉

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