My favorite part of the story.

So we'll learn about the early leak of today's news around 2014?

haha yeah i thought the same thing


I'm just happy that sentence got its own sub-heading

Anyway, my favorite part:

2060 seems more likely

Hahaha, yeah.

Also, it's tougher and tougher for me to dismiss conspiracy theories of a global currency as crazy given that nearly a dozen of the world's largest central banks just coordinated on these currency facilities. Pretty sure they're working on some kind of SDR or something behind the scenes.

I don't know. I think it's fairly plausible that they see saving the euro as imperative to maintaining stability in the world economy, and see coordinated action as the only way to do it. I would also be somewhat surprised if the US got behind such a move, if only because the USD's role as reserve and vehicle currency seems to help protect US debt from markets in ways euro countries aren't protected. Of course, there are downsides to its role, too.

But even if the US were to endorse an international currency, I assume it would only act as a vehicle currency, or something to maintain reserves in, not as any national currency. Or do you see it differently? If policymakers are learning something from the euro crisis, it's probably along the lines of fiscally independent (and economically non-integrated) entities needing monetary independence.

Any chance someone could give me a run down on the actual mechanics on how this European Bailout worked? Are there any actual concrete numbers about who is contributing what? I've heard very little about it, and all the articles I read are pretty vague.

I guess the question I'm confused the most about is... why did they need America as a middle man? Couldn't China just lend them the money directly?

This just seems frighteningly stupid, unethical, irresponsible, and quite frankly dangerous.

well yeah its what they do.

I just don't understand how the fuck the federal reserve can possibly have the power or authority to put the citizenry on the hook for another continents debts.

I just DO NOT UNDERSTAND. Well, I mean, I do, I just don't understand how this happens. It's pretty clear to me that if this was a good investment that China wouldn't be using America as a middle man and they'd just directly lend to Europe on their own.

Somewhere a Chinese Financial Officer is laughing his ass off.

America was the middle man because the dollar is the world's reserve currency, and as such comprises the bottom of the inverted pyramid from which all other instruments - regardless of the currency in which they are denominated - are leveraged. The European crisis has put intense pressure on insolvent European institutions, and counterparties are demanding redemption...in dollars (nearly all short-term positions - regardless of the country in which some firm is located - are reckoned in dollars). Hence, a dollar funding crisis. Enter: Fed. Exit: Sanity.

http://www.bis.org/publ/work291.pdf?noframes=1

well, if you were to sit down and have a beer with Timmy G. he would say it's to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity...

In other words, he and his ilk continue to treat a solvency crisis like it's a liquidity crisis. They continue to solve the wrong problem because they know that solving the right one would require an enormous economic contraction.

exactly

The scariest thing is that they're pretty much completely out of ammo - aside from raw monetization - at this point. What happens at the end of the half-life of this bailout? What happens when Japan's carrying costs rise? What happens when America's carrying costs rise?

I talked to a contractor the other day about building a moat around my house..seemed like a good idea at the time but at the beach there is too much fear that the ground can erode or become soft and your foundation may sink, shift, or crack. Something that costs massive amounts of money to fix. Also, think about the effort to clean it and remove the sharks

These two articles seem to provide pretty good rundowns (for someone like me, at least, who's not especially knowledgeable on currency swaps).

http://www.reuters.com/article/2011/11/ ... XT20111130
http://www.sfgate.com/cgi-bin/article.c ... 0UQVI9.DTL

oh wait, thodoks beat me to it.

No, those were good articles, dkfan9.

my favorite part about the sfgate page was on the right side telling me that Barry Zito is engaged