Thursday - December 02, 2010

Is the U.S. set to be dragged into Europe’s financial troubles? Euro soars on rumor.

We no longer live in a world where we can isolate ourselves and pretend we aren’t affected by outside influences.  I wish that were not so.  I wish we could actually build a wall around ourselves and tell the rest of the world to buzz off. Being me of course I’d use cruder terminology. And I very definitely do not want to be the world’s policeman.  I do not care how China treats its people in its own back yard. I don’t care what Putin and Russia do so long as it doesn’t cause problems for the USA.  If I get PO’d when outsiders stick their nose in our internal affairs, I can hardly be surprised when others get a nose out of joint when we do the same.  But okay .. the world is connected as it has never been before.  We have enemies the likes of which we have not known in the past. At least not to the degree we now face.  So we are indeed connected, like it or not.

Which leads me to .....

Don’t be coy and don’t misrepresent this story. The US has already contributed to the fund and even more than that, it stopped the slide of the Euro during the Greek crisis through Currency Swaps. The ECB needed US Dollars to buy up the bonds the PIIGS were issuing, that the capital markets were rejecting. Without the Swaps the Euro would have fallen to who knows where, leading to much higher costs for Europeans to bail out the PIIGS. The reason the US Fed did this was to protect the Trillion dollar investments US banks have in the PIIGS alone. When Trichet spoke of the possibility of buying bonds from the PIIGS today he was signaling a further round of Currency Swaps between the ECB, the BoE and other foreign Central Banks. If all you great Brits are ignorant of what Currency Swaps are, look it up on Wikipedia, they explain it simply enough for you to understand.

- Jeff, Boulder, CO USA, 02/12/2010 00:53

We can’t save ourselves. We are headed the same way. If we aren’t working we aren’t paying taxes, and if we aren’t paying taxes our government has to print money that isn’t worth what people expect of it--so if we write Europe a hot check for aid, what will come of it for all of us?

- Sheri, OKC, Oklahoma, USA, 02/12/2010 02:52

The title of this story is very misleading - it should be the opposite way around. Europe was dragged into the US’s financial troubles when our greedy bankers invested in the US sub-prime mortgage market. The sub-prime mortgage fiasco was essentially that US financial institutions were pressured into lending mortgages to people with low credit ratings. Many then went on to default and the rest is history. Those who set this in motion were of course on the Democrat-Left and included the ‘Clintonistas’ and the soon to be President Mr Obama himself.
All part of the ongoing destruction of the West by the Liberal-Left. By the way the US National Debt is nearly $14 Trillion - and they’re going to bail us out via the IMF? Don’t make me laugh.

- A Richards, London, England, 02/12/2010 01:37

So just what are these people commenting on?  Well, the morning news here at 7am UK time.  See what you think of all this. And is the USA going in deeper? 

Is the U.S. set to be dragged into Europe’s financial troubles? Euro soars amid claims America will support IMF bailout

By Daily Mail Reporter

Last updated at 4:05 AM on 2nd December 2010

The euro soared today after a report that the U.S. would support a larger aid package for Europe through the International Monetary Fund.
In midday trading in New York, the euro traded at $1.3140 from $1.3011 late Tuesday. It popped by more than one cent immediately after the report came out.
Reuters reported at midday that an unnamed U.S. official said the U.S. would be willing to have the International Monetary Fund give more money to the European Financial Stability Facility.

The U.S. is the IMF’s biggest stakeholder.
The EFSF is a 440billion euro fund the Europeans put together as part of a broader 750billion euro rescue package in May during the Greek debt crisis.
The IMF has already pledged up to 250billion euro.  The Obama administration would not comment on the report.

Treasury Secretary Timothy Geithner did dispatch Treasury Undersecretary Lael Brainerd, Treasury’s top official on international matters, for talks with European officials. Mr Brainerd had meetings in Madrid with economic officials on Wednesday and was scheduled to be in Berlin on Thursday and Paris on Friday.

The U.S. ‘can’t afford to let Europe implode,’ said David Gilmore of Foreign Exchange Analytics.
But the statement might not mean that the U.S. has already agreed to a deal allowing the IMF to contribute more money or ponying up more money for Europe itself.

One possibility is that the Americans are ‘flying a kite to the Europeans to push them in the direction of increasing the stability fund,’ Mr Gilmore said.
The euro has fallen 10 per cent since early November as Ireland, after Greece, accepted billions in emergency financing. Investors now worry Portugal may be next, or even Spain.

Spain, due to the size of its economy, would be a much greater financial burden that the other countries should it require a bailout.
A spokesman for the EU’s monetary affairs chief Olli Rehn said he had not heard of talks about extending the EFSF fund.

SOURCE

Posted by peiper     on 12/02/2010 at 02:15 AM   
Filed Under: • Economics • International • USA •  
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