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Reply #40: Fed leads central banks in effort to ease funding woes [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-01-11 08:20 AM
Response to Reply #12
40. Fed leads central banks in effort to ease funding woes
GOOD OLD UNCLE SUCKER WILL SOON BE DRAINING THE BLOOD OUT OF THE PEASANTS TO FILL THE SWIMMING POOLS OF THE 1%...A COMPENDIUM OF PRESS REPORTS:

Central banks step in to stave off new credit crunch

http://www.guardian.co.uk/business/2011/nov/30/central-...

Stock markets surge as fears for the euro force concerted emergency action to aid cash-strapped banks...The world's major central banks announced concerted emergency measures to underpin fragile eurozone banks and prevent the global financial system from freezing up...In a clear sign that policymakers fear the downturn in the eurozone risks spiralling into a fresh credit crunch where banks stop lending they announced "co-ordinated central bank action to address pressures in global money markets".

Stock markets around the world surged after policymakers said they would cut the interest rate on emergency dollar loans to cash-strapped banks by 0.5 percentage points and extend the scheme until February 2013. They will also establish "temporary bilateral liquidity swap arrangements" between one central bank and another, allowing liquidity to be provided at short notice in any currency "should market conditions so warrant".

"At least they've got their finger on the panic button," said Graham Turner, of GFC Economics in London. "There's an awful lot that central banks can do and this shows that they're not going to sit idly by and let the whole thing implode."

...The joint action was reminiscent of autumn 2008, when central banks came together to slash interest rates and inject liquidity into financial markets in the wake of the collapse of Lehman Brothers...Banking analysts have been warning for some time that eurozone banks, which must reconcile their finances before the end of the year, are running short of dollars to pay US creditors...Jeremy Cook, chief economist at foreign exchange company World First, suggested that central bankers had tired of European leaders' failure to fix the euro crisis. "Cutting swap costs is the equivalent of interest rate cuts," he said. "This may have been a signal that the money markets were a short shove away from complete collapse...

Markets soar after central banks act to ease credit crisis

http://www.telegraph.co.uk/finance/financialcrisis/8926...

Stockmarkets soared as six of the world's richest central banks announced a co-ordinated effort to outflank European political deadlock and unlock the financial markets themselves...The US Federal Reserve led a synchronised wave of announcements from the Bank of England, the European Central Bank and the central banks of Canada, Switzerland and Japan that were designed to pump liquidity into the markets.

The six banks said they were cutting the cost of dollar swap lines, effectively halving the price of banks borrowing dollars to fund themselves from 100bps to 50bps above a base rate. They aimed to unblock the flow of money which, compounded by a severe loss of confidence, is threatening to freeze the financial system again. The banks attempted co-ordinated action in September, but on a far smaller scale.

Just a few hours before, the Bank of China unveiled a similar move by cutting its reserve requirements for banks for the first time in three years...

6 Central Banks Act to Buy Time in Europe Crisis

http://www.nytimes.com/2011/12/01/business/central-bank...

TIME FOR WHAT? THE CYNIC MIGHT ASK...TIME TO GET ANOTHER WAR ON, SINCE LIBYA OBVIOUSLY DIDN'T HAVE THE STIMULATIVE EFFECT THEY EXPECTED? TIME TO GET OBAMA BACK IN OFFICE, AND THE GOLDMAN SATRAPS INSTALLED IN THE CAPITALS OF EUROPE?

..."giving Europe more time to wrestle with its debts"...

YEAH, SURE, THAT'S WHAT THEY ARE DOING.... :rofl:

ECB hints at action if euro zone adopts fiscal pact

http://www.reuters.com/article/2011/12/01/us-eurozone-i...

The new head of the European Central Bank signaled on Thursday it was ready to take stronger action to fight Europe's debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation euro zone...Speaking a day after the world's major central banks took emergency joint action to provide cheaper dollar funding for starved European banks, Mario Draghi painted a dark picture of the state of the banking system.

"A new fiscal compact would be the most important signal from euro area governments for embarking on a path of comprehensive deepening of economic integration. It would also present a clear trajectory for the future evolution of the euro area, thus framing expectations," he told the European Parliament. Draghi did not spell out what action the ECB might take (PONIES FOR EVERYONE!), but it is under huge political and market pressure to massively step up purchases of euro zone government bonds or lend money to the IMF to support ailing Italy and Spain. In the short-term, economists expect the central bank to relieve pressure on banks and an economy heading into recession cutting interest rates next week and announcing longer-term cheap liquidity tenders with easier collateral rules. Markets are pricing in a 25 basis point cut to 1.0 percent on December 8 and Draghi said nothing to dissuade them.

In response to lawmakers' comments, he added that the ECB had scope to act within the European Union treaty and the most important thing was to make sure that frozen credit channels started to work again. Draghi, who faces some of the toughest decisions in the currency's 12-year history after just one month in the job, said the ECB was aware many European banks were in difficulty because of stress on sovereign bonds, tight inter-bank funding markets and scarce collateral. "Downside risks to the economic outlook have increased," he said, noting that the ECB's mandate was to maintain price stability "in both directions" -- a rare indication that the bank is concerned about deflation risks as well as inflation.

Two years into Europe's debt crisis, investors are fleeing the euro zone bond market, European banks are dumping government debt, south European banks are bleeding deposits and a recession looms, fuelling doubts about the survival of the single currency...European Union leaders hold a crucial summit on December 9 at which EU paymaster Germany is pressing for an agreement on treaty change to establish coercive powers to veto national budgets in the euro zone that breach agreed rules. That prompted the chief financial officer of the European Bank for Reconstruction and Development, Manfred Schepers, to tell a Dutch newspaper: "There are seven work days left to save Europe."

AND SO FORTH AND SO ON...
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