Global Economy Bursting?

[coolhandluke]

http://act.credoaction.com/campaign/back_schneiderman/?rc=fb_share2

Jail Wall Street Crooks

 

[Workbox]

Gee thanks Europe for messing up my MoJo. Gave back my gains. Just got to wait for Monday or Tuesday for a rally.....Thats if no one blows anything up over the weekend. :icon_mrgreen:

 

[Randolph Kinney]

Euro area: “illogical” to exclude bankruptcy countries, says the Estonian Minister of Finance

http://economicsnewspaper.com/world...s-the-estonian-minister-of-finance-66062.html

“I still do not understand how a failure to pay (heavily indebted countries) can be avoided,” said Juhan Parts in German daily Financial Times Deutschland. “In a market economy, this should be an option. It is illogical to want to avoid this issue,” he added.

 

[Randolph Kinney]

Germany Said to Ready Plan to Help Banks If Greece Defaults

http://www.bloomberg.com/news/2011-...id-country-s-banks-should-greece-default.html

Chancellor Angela Merkel’s government is preparing plans to shore up German banks in the event that Greece fails to meet the terms of its aid package and defaults, three coalition officials said.

Credit-default swaps insuring Greek sovereign bonds jumped 212 basis points to a record 3,238, according to CMA. The five- year contracts signal there’s a 92 percent probability the country won’t meet its debt commitments.

 

[Randolph Kinney]

Europe Is Urged to Take Bolder Action on Debt

http://www.nytimes.com/2011/09/10/b...growth.html?_r=1&nl=todaysheadlines&emc=tha25

Treasury Secretary Timothy F. Geithner warned that headwinds from Europe's deepening debt crisis risked exacerbating problems in the United States. He urged European leaders to take more forceful action to show they were committed to resolving their problems. But he did not say the United States was prepared to backstop them to prevent the crisis from spreading.

 

[Workbox]

Europe Is Urged to Take Bolder Action on Debt

http://www.nytimes.com/2011/09/10/b...growth.html?_r=1&nl=todaysheadlines&emc=tha25

Treasury Secretary Timothy F. Geithner warned that headwinds from Europe's deepening debt crisis risked exacerbating problems in the United States. He urged European leaders to take more forceful action to show they were committed to resolving their problems. But he did not say the United States was prepared to backstop them to prevent the crisis from spreading.

I think that is code to let them know that they got the "Beer" and to get the cups ready for the party. :icon_mrgreen:

 

[Randolph Kinney]

I think that is code to let them know that they got the "Beer" and to get the cups ready for the party. :icon_mrgreen:

What's missing? Reassurance that the governments will make investors whole against default. Banks are holding depositors' money, which has been lost already. Our federal reserve have given banks all kinds of free money that they won't lend out, except to buy more U.S. Treasury paper and keep the rest on deposit with the federal reserve. Meanwhile, all those loans that banks have made are going bad as people and corporations continue to default. That requires more free reserves to boost banks' earnings. Given enough time, the banks can earn their way back to solvency, provided that defaults abate.

Europe does not have the same set up as the U.S. Their banks hold individual sovereign country debt denominated in euros. The ECB does not create free reserves, unless it buys back from the banks the already issued sovereign debt which it needs authorization by each member country and each country pledges to share that cost - their taxpayers. It would be like our states holding power over the federal government to issue debt with each state pledging to share the cost - their taxpayers. Example, California, will gladly accept the liability just as Greece gladly accepts the liability, if the federal government (ECB in the case of Greece) will buy bonds issued by California.

The question always remains, who will pay and who will guarantee payment. The taxpayers are suppose to pay but in case they don't, the federal reserve guarantees payment with the printing press and investors get paid. That reassurance is missing in Europe.

 

[Randolph Kinney]

Biggest French Banks Said Poised to Be Downgraded by Moody’s

http://www.businessweek.com/news/20...-said-poised-to-be-downgraded-by-moody-s.html

 

[Randolph Kinney]

Here's Why Everyone's Thinking That Greece Might Default This Weekend

Read more: http://www.businessinsider.com/speculation-that-greece-will-default-2011-9#ixzz1XcBHCFzq

 

[Workbox]

Here's Why Everyone's Thinking That Greece Might Default This Weekend

Read more: http://www.businessinsider.com/speculation-that-greece-will-default-2011-9#ixzz1XcBHCFzq

What gets me, is why is a toothpick economy effecting the rest of the world? It is shear speculation/manipulation to rattle the markets and media hype. We have been worrying about Greece for the past 4 years, most Americans can't even find it on a map. :new_smile-l: