The European Central Bank (honestly, that's what they arrogantly call it!) is flooding the wholesale money market with loans at low rates. So much so that, given the favourable rates, British banks have waded in and are having a slice of the pie. The British banks seem to be using these funds to prop-up their subsidiaries in the troubled Southern European economies.
This money is, in some ways, akin to the Quantitative Easing practised by the Bank of England and the US Federal Reserve.
In some ways. One key way in which it isn't the same is that the people whose pockets and wallets stand behind this largesse, are not being told about it. When does financial sleight of hand become fraud? You decide!
National Central Banks in the EuroZone countries ultimately provide the funding for the ECB. There is no way that the Eurocrats have the courage to directly ask the governments of Germany, Netherlands Finland etc., to fund this folly. So they are doing it by the back-door. They are creating a situation where the ECB, will at some point, have to go to those national governments for funding and the hope is that the national governments will conclude that they have no choice, will dress this up as unrelated to the actual Eurozone crisis and will pay-up. Good news is that the citizens of those countries won't be asked to vote on the process - just to pay up!
Most of these ECB loans are being used to buy-up government bonds from the failing economies of Southern Europe. In doing so, the cost of this government paper comes down - because, it is suddenly so popular! However, in order to get the loans, the European banks must lodge, as collateral their highest quality assets. In doing so, they weaken their own balance sheets and make the likelihood of a need for a government bailout, shortly down the road, that much more probable. Spanish and Italian banks are heavily tied into their own country's fate but German and particularly French banks also have heavy exposure here.
Rumour has it that there is a proposal doing the rounds of the European governments to change the alphabet. The proposal is to drop the letter D. The proposers suggest that without this letter we wouldn't have a deficit, there would be no debt, the actual depression in Southern Europe wouldn't exist and that pesky old Greek word democracy, wouldn't be bothering us (not that it does too much, anyway!!)
By the way, other than giving us the word democracy, what have the Greeks done for us (Life of Brian followers, only please!).
Seems that, not for the first time, the Germans are proving to be a barrier to this necessary reform on the pathway to a federal European utopia. Seems that a country that is less than 200 years old, has grown accustomed and has invested a lot of its national prestige in being called Deutschland! Hopefully a way can be found to eliminate the letter D without the German parliament or Constitutional Court being called into the discussion. The problem with the Dutch is easily solved, we just call them Hollanders. The Danes can be Vikings.
This money is, in some ways, akin to the Quantitative Easing practised by the Bank of England and the US Federal Reserve.
In some ways. One key way in which it isn't the same is that the people whose pockets and wallets stand behind this largesse, are not being told about it. When does financial sleight of hand become fraud? You decide!
National Central Banks in the EuroZone countries ultimately provide the funding for the ECB. There is no way that the Eurocrats have the courage to directly ask the governments of Germany, Netherlands Finland etc., to fund this folly. So they are doing it by the back-door. They are creating a situation where the ECB, will at some point, have to go to those national governments for funding and the hope is that the national governments will conclude that they have no choice, will dress this up as unrelated to the actual Eurozone crisis and will pay-up. Good news is that the citizens of those countries won't be asked to vote on the process - just to pay up!
Most of these ECB loans are being used to buy-up government bonds from the failing economies of Southern Europe. In doing so, the cost of this government paper comes down - because, it is suddenly so popular! However, in order to get the loans, the European banks must lodge, as collateral their highest quality assets. In doing so, they weaken their own balance sheets and make the likelihood of a need for a government bailout, shortly down the road, that much more probable. Spanish and Italian banks are heavily tied into their own country's fate but German and particularly French banks also have heavy exposure here.
Rumour has it that there is a proposal doing the rounds of the European governments to change the alphabet. The proposal is to drop the letter D. The proposers suggest that without this letter we wouldn't have a deficit, there would be no debt, the actual depression in Southern Europe wouldn't exist and that pesky old Greek word democracy, wouldn't be bothering us (not that it does too much, anyway!!)
By the way, other than giving us the word democracy, what have the Greeks done for us (Life of Brian followers, only please!).
Seems that, not for the first time, the Germans are proving to be a barrier to this necessary reform on the pathway to a federal European utopia. Seems that a country that is less than 200 years old, has grown accustomed and has invested a lot of its national prestige in being called Deutschland! Hopefully a way can be found to eliminate the letter D without the German parliament or Constitutional Court being called into the discussion. The problem with the Dutch is easily solved, we just call them Hollanders. The Danes can be Vikings.
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