Sunday, September 25, 2011

Financial Terrorists Strike, Again

It’s deja vu all over again, again.

How many times are we going to throw trillions of dollars at the “too big to fail” banks before someone, anyone in a position of power realizes that they have to be broken up?

The Fed and the Obama Administration, all the King’s horses and all the King’s men, keep trying to put Humpty Dumpty back together again. Hello, the global Ponzi players had quite the run but it’s O-V-E-R. The fraud has been exposed to too many people now.

So please stop throwing our economic future into the abyss.

The Eurozone is absolutely imploding and once again we are being thrown under the bus in attempts to prop up an insolvent banking system. This is all so absurd! Enough is enough already.

Ok, let me back up a bit and explain this latest attack. Let’s start with this video from Dylan Ratigan:

Coordinated Central Bank EU Bailouts
(If you’re pressed for time, jump to the 6-minute mark.)

Here’s a roundup of reports that explain things further and get right to the heart of the matter:

The European Bank Bailout
By Ed Harrison, Credit Writedowns

Three articles I read in the past day get to the problems with these liquidity bailouts.

First comes from the US where Warren Mosler asks why is the Fed lending dollars unsecured to the ECB… again. He says “Congress should not allow the Fed to lend unsecured to foreign central banks without specific Congressional approval” because “It’s like lending your dollars to someone in a far away land who uses his watch for collateral. But he gets to keep wearing the watch, and he’s out of your legal jurisdiction.”

Second is the Anne Sibert article on the damaged ECB legitimacy. She writes that the ECB has been opaque about how it conducts monetary policy as well as how it provides liquidity. It is the second part that worries her most because “In its attempt to maintain financial stability the ECB and Eurosystem have had to walk a fine line between providing just enough liquidity to keep potentially solvent institutions afloat and subsidising the financial sector.” Does that sound familiar? It should because the Fed operated in the same opaque manner during the first crisis.

Finally, there is growing evidence that ECB Chief Economist Juergen Stark quit his job because “he did not want to support the lending of dollars to euro-area banks.” Former Bank of England central banker David Blanchflower told Bloomberg News this in a radio interview yesterday. While Blanchflower says this was much needed and “should have happened a while ago”, it puts the central bank in a quasi-fiscal role that had already caused another high profile German, Axel Weber (widely tipped to have been in line for the top job) to resign from the ECB as well. more