Bernanke bails out Europe

[Octafish]

Last edited Sat Jun 23, 2012, 11:12 PM - Edit history (2)

This bothers me:

Bernanke bails out Europe

The Fed debated domestic policy this week, but its actions in Europe are just as revealing

By Steve Weissman
Salon.com, Saturday, Jun 23, 2012 07:00 AM EDT

EXCERPT...

“The crisis in Europe has affected the U.S. economy by acting as a drag on our exports, weighing on business and consumer confidence, and pressuring U.S. financial markets and institutions,” he testified to Congress earlier this month. “As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate.”

The needed action has already started, as Gerald P. O’Driscoll Jr., a former vice-president of the Federal Reserve Bank of Dallas, explained last December in the Wall Street Journal. He called his whistle-blowing exposé “The Federal Reserve s Covert Bailout of Europe.”

SNIP...

The swaps differ from the $1.2 trillion in direct loans that the Fed made to American and foreign banks following the bankruptcy of Lehman Brothers in 2008. As documented by the non-partisan Government Accountability Office, these direct loans dwarfed the $700 billion Troubled Asset Relief Program (TARP) and greatly embarrassed the Fed, which fought to keep the information from becoming public. The swaps keep the dollars from showing up on the Federal Reserve’s balance sheet and let the foreign central banks pick the recipients and make the loans.

SNIP...

If the economics seem complicated, the politics are worse. So far, the leaders here in Europe have failed to build sufficient popular support for their European project, and the solutions they are currently discussing all would give their people far less democratic control over the decisions that affect their lives. In fact, power would increasingly go to the financial giants on Wall Street and their allies in London, Frankfurt and Zurich. These are roughly the same folks who dominate the supposedly independent Federal Reserve, and Ben Bernanke’s inscrutable currency swaps will only feather their nest.

SOURCE: http://www.salon.com/2012/06/23/bernanke_bails_out_europe/?source=newsletter

Perhaps Ben B found inspiration from the field of battle: "We have to bail them out over there so we don't have to bail them out over here."

Do you find The FED bailing out European banks bothersome?

PS: Hope bailing out the global banksters doesn't turn into an open-ended thing. You know, like the War on Drugs and the War on Terror and how the Cold War used to be.

[golfguru]

1. We should bail out every country in the world

we have huge budget surpluses and no national debt!
And we have lot's of paper and ink!! <Sarc>

[PoliticAverse]

3. Why use paper and ink when you can just type another '0' on a PC ? n/t

[Octafish]

6. Exactly. Then Goldman Sachs can refinance their debt load with derivatives.

Backed by the US taxpayer, of course. They're not crazy.

The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.

It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

CONTINUED...

http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=all

Austerity's great for the bond holders.

[DeSwiss]

2. K&R

[center]

The Ben little pony is cute
A point that's decidedly moot
For this pony's bad
His POMO are mad
He's constantly stealing our loot

The Limerick King[/center]

[Octafish]

7. LOLOL! My little POMO!

That graphic is beautiful. The bankster mask with the "My Little Pony" symbolism is parfait. And, if POMO means what I think it means, I'm totally there...POstMOdernism and We the People are totally there -- PODEmocracy.

http://www.commondreams.org/headline/2012/06/12-9

[DeSwiss]

14. WilliamBanzai7 is truly a talented treasure.....

[center]
The problems in Europe are tough
They're trying to cover their stuff
Their fabric's too small
To cover it all
They can't hide the fact it's a muff

The Limerick King[/center]

- As for the meaning of POMO, I'm afraid it's just more dry financial terminology (i.e. - Weapons of Mass Depression) which is used so that the FED can ''legally'' rob us.......

[JDPriestly]

4. Banks get bailed out; we get sold out.

"the Fed has entered into agreements with the European Central Bank to provide billions of dollars, which the ECB then lends to ailing banks in Europe to increase their liquidity. The Fed also agreed to similar deals with the central banks of England, Switzerland, Japan and Canada. Technically, the dollars are not loans. They are instead “currency swaps.” In return for the dollars, the ECB and other central banks give the Fed equivalent amounts of their own currency, along with an agreement to return the dollars at the same exchange rate."

http://www.salon.com/2012/06/23/bernanke_bails_out_europe/?source=newsletter

Obama promised in his State of the Union speech that the banks would not be bailed out again -- so Bernanke found a way to bail out the banks but call it bailing out Europe.

This is hideous. Hideous.

Meanwhile, the banks and Wall Street continue to play with derivatives and our future.

The point of this bail-out is to make sure that the oligarchy, the very, very rich don't lose any money. Bernanke will claim that it is to save jobs. I don't think that is the point. I repeat that I think the real purpose of this bank bail-out (and shoring up the European economy and the ECB is being done to make it possible for the companies that owe money to our banks to repay it at least on paper) is to make sure that people like Jamie Dimon and his friends save their face and stay rich.

Will this help Greece? Maybe a little, but mostly it will help move mega-bucks into our mega-banks.

[PoliticAverse]

5. ...

[KakistocracyHater]

8. CORRECTED: the Fed bailed out Europe's Banksters

because no one else will see that money

[bhikkhu]

9. It all depends on whether it works or not

Europe is well worth helping if it winds up stabilizing the economies there. Which are some of the most egalitarian and admirable on the planet, one might add - superior in many ways to what we or anyone else enjoys. If there were a collapse it is hard to say whether any path could lead to something as good again in our lifetimes.

It has been pretty clear that the drag back toward recession here has come from Europe, for the last few months. Even without other considerations, it is in our best interests that things improve there.

[TheKentuckian]

10. Work to give the banks more money. The people get the shaft.

[bhikkhu]

13. At least in Europe it sometimes works this way:

http://www.rt.com/news/greek-debt-write-off-843/ "European banks agreed early on Thursday to write off 50 per cent of Greek debt..."

That was back in October, so it clearly wasn't enough. It was nice to see private banks actually take part of the hit, though, instead of public funds being used to assure that they made every dime they expected to.

[pampango]

11. Well said. Europe is worth helping. We are all in this together and they are "some of the most

egalitarian and admirable on the planet".

[banned from Kos]

12. Salon has written a misleading article

The Fed is already profiting from the swaps. And they are swaps - one currency for another because the Euro-banks need US Dollars to settle transactions.

This costs us nothing.