International Banking :

[bimetalaupt]

So what do we do if things go wrong with the 1.5Trillion reduction in excess Federal Reserve Holdings .. No more QE.. there is the latest dumb Idea from BB... Sure miss Saul Warburg.. Bruce PS I vote for smaller local Financial None Banks.. like Farmer's credit!! The First Bank of the USA had only a 20 year life span..

FDIC: Biggest banks need to submit 'living wills'
2:13 pm ET 05/11/2010 - MarketWatch Databased News

WASHINGTON (MarketWatch) - About 40 of the largest U.S. banks would need to submit "living wills" to bank regulators, according to a Federal Deposit Insurance Corp. proposal responding to the financial crisis released Tuesday that mirrors requirements legislators are considering on Capitol Hill.

The proposal requires big banks, with consumer deposit divisions, to provide the FDIC plans of how they could be broken up in an economic emergency.

Banks, which have more than $10 billion in assets that are units of financial institutions with more than $100 billion in assets would need to provide their plans to the FDIC. The agency said the measure would cover banks with $8.3 trillion in assets.

Specifically, these institutions would need to submit to the FDIC analysis, information, and plans to show how their depository units could be separated from their parent company and dismantled in a way that does not cause collateral damage to the markets.

The FDIC said the plans would help agency officials assess the risk to its deposit insurance fund, which is used to make cover costs to depositors of a failed bank.

The proposal comes at the same time as lawmakers on Capitol Hill draft sweeping bank reform legislation that includes a provision to have big banks provide living wills to regulators. The legislation would also create a mechanism to dismantle a large failing bank in a way that it does not cause collateral damage to the markets.

Lawmakers are squabbling about whether big banks would pay fees in advance to cover the costs of making payouts to a failing bank's "healthy bank" counterparties so that they don't fail as well.

more later...M3 has not grown .Most of the Talking heads do not have a clue what that means.. Like 1931 the Central Banks are not replacting money lost in closed banks.

Re Math,
Great Point!! We have tight money and M3 is under attack so the Fed wants to remove excessive Liquidity?? I do not know where you live but here small firms are at a loss to find funding for growth. Now the Federal Reserve want to sell Banks CD's from the twelve Reserve Banks to reduce excessive monies??? Also they talked about doing reverse repo's.. There is a crash looking for when.
The Money theory is that M3 (large CD's) lets the bank know how long they have your money to lend.. They are not lending it so M3 has been reduced by 9%. The reduction in M3 vs the increase in 2007 is greater then the QE used to correct the Problem with bad banks. In 2007-2008 banks stopped lending to each other so the whole system died.

Question: How do we get banks lending instead of increasing EXCESSIVE reserves? The Farm Credit was just one idea. Increased food prices also mean more farm income. With bankers getting 250 Million USD in bonuses could they not pay the farmer a living wage of say $35,000 a year?

Great Question!! thank-you
Bi Metal Au Pt

[bimetalaupt]

From Old and Gray..AKA Yes.. We have the banking experence and banking Know-how to make it work.. Now to get the right people in the right banks!!!

Call me a dreamer, but I do believe we have the talent available to draw up and implement policy and programs to control the banks. All we need is one, just one! proviso. . . Keep professional bank officers, executives and Board members off the committees. That would include those University professors who are often little more than hacks for the industry.
Despite her standout performances, I don't believe Sheila Bair is a "one-and-only". It's not surprising that under her leadership, the FDIC is asking the big banks what they intend to do when faced with failure. I've had the opportunity to meet quite a few exceptionally talented people in my day who have not had what is generally considered to be the requisite training, and professional exposure, who were capable of evaluating situations, drawing up eminently workable programs, and in rare instances, when allowed the latitude to perform, have been capable of working us out of situations in which the "professionals" seemed completely at sea.

Unfortunately, too often, people with the skills but without the credentials are in the minority and are voted down and inferior programs which cater to the industry in ineffective ways, which almost guarantee disappointment, are implemented.

In banking, The Fed is the premiere case in point. The Federal Reserve Act is replete with punishments for errant bankers. Title 18 USC Chapter 11 - Bribery, Graft and Conflicts of Interest also attempts to restrict those who would abuse their positions. Unfortunately, there's a wide gap between drawing up the programs, proposing penalties and the investigation, prosecution and punishments resulting. Once in a great wide we get a Bernie Madoff sacrificial lamb. Generally, the greater evils, such as the deception in the inappropriate mortgages and the collapse in the market which, given the weakness of the documents and the management (or lack thereof) of the system, was inevitable. The obscene fees and bonuses - which is the equivalent of Bribery, Graft, or Conflict of Interest at a high level - and were completely unwarranted - should have been of prime concern. The principals involved in these cases were not prosecuted under the terms of the Fed Reserve Act dealing with "Liability for damages resulting from Violations" or the certain offenses committed by examiners, officers and directors of member banks (of the Fed system) because the Fed was permitted to make exceptions to penalties prescribed for transgressions on their own.

What good is accomplished with proscribed penalties of $1 million and 30 years imprisonment if the party responsible for prosecution acts as the protector-in-chief of the offenders?



So, we're going to have the helicopter effect, courtesy of the Fed, in the hope that the activity in the far corners of the earth will distract the folks at home who seek retribution. It wouldn't be bad if in supporting the global financial stress, we pledge the toxic paper the Fed accepted for collateral during the great bailout. Except the foreign banks are too smart for that. We have nothing to offer but more debt. There are no accumulating resources. As soon as banks build a little reserve, they distribute it to "retain the talented staff people". . . those who hinted at the corrupt keepers of the vault being engaged in corrective action know full well that those people do have the knowledge and talent to correct the situation. They simply do not have the integrity to do things honorably. So, if they are involved, whatever path we choose will lead to more devastation too soon.

In the US, we must start with the Fed. That "Independence" they protect so carefully is largely responsible for getting us in the mess in the first place, and if allowed to continue unchecked will lead down the same path with the same results magnified.



Old and gray
Message #10
05/11/10 03:41 PM


It's not possible to continue throwing debt at debt and work yourself out of the mess. Also, despite what Bagehot espoused in the last quarter of the nineteenth century - when in deep stress, banks should continue to payout to unruly crowds until they are assured their demands will be met and they calm down. Roosevelt's administration took the opposite path, closed the banks down, and the run was stemmed. We were then able to operate again, not royally, not elegantly nor even stylishly, but we operated and survived. It's not the best of worlds when the innocent have to bear the brunt of the burden. But, until we decide to punish those who deserve it, that's the way we get out of the deep pits.

Start with the Fed. Until we do that, it's just one means of postponing the day of reckoning.

There's no short cut to generating capital. Calluses and aching backs, that's what we had in the Depression and that's what is needed whenever the treasury and vaults have been raided. We've got to build those reserves back up. To do this, credit is an absolute necessity, or there is no future. Banks obviously don't see a future, so they won't extend credit. Yet, here we are committing to toss credit out to the rest of the world when we aren't willing to help ourselves.



Somebody has to explain that logic to me. In my jumbled thinking, it just doesn't compute.

[olderstill]

In reference to the "Liability for damages resulting from Violations" cited above, I was disturbed on reading about the continuing record of violations and fraud which seemed to be the norm for banking executives (posted on the "Whatever happened to the 'Toxic Assets'?" thread about two weeks ago). I believe it can stand a repeat here.



Sad to say that the bankers' errant behavior alluded to in the above analysis is not new. I recall having read of one complaint drawn up on the Bank of Ireland in the year 1720, in which the charge of fraud was leveled against management. [Close to three hundred years ago. They're still doing the same thing.] Our own Congressional committees have had hearings on fraud as far back as you care to go, and as recently as the 1990s. [Then they seemed to have stopped.] Bankers continue to deliberately mismanage to get a personal advantage; and, if that isn't enough, they flagrantly, meaning without hesitation or compunction, violate law and commit fraud.

Gary Gorton, [formerly of Penn, now with Yale,] has left a trail of banking study publications reaching back to about 1985. One of his articles entitled, "Slapped it the Face by the Invisible Hand" (in an inside joke in reference to Adam Smith's use of the "invisible hand" term in his Wealth of Nations), cites a study by the Comptroller of the Currency (established by the Banking Act of 1863) from 1865 through 1931 which tracked three causes for bank failures: 1) Poor management; 2) Fraud and violation of law; and 3) Depression and Depreciation of Assets. Care to guess which bears the least blame? Of course, the last. Out of twelve periods analyzed, only three have a 50% or slightly better weight of Depression or depreciation of values causing some consternation to bank stability. Conversely, 9 out of 12 place the major part of the blame on poor management and fraud and violation of law.

Unfortunately, in the period from 1865 to 1931, we learned that bankers are ill suited to be entrusted with the financial welfare of the nation; yet, authorities have not gathered up the courage and moved to effectively police the industry to put a stop to the practices that deliver disaster to the rest of the community. The combination of fraud and mismanagement bore responsibility for failures as high as 88% as determined by the Comptroller of the Currency in one period, 1914-1920. Several had rates 75% or higher.

IMO in the current crisis, if the figures were still being generated honestly, that 88% would be topped without a sweat. If the significance of the data is studied closely, we might also conclude that since bankers can't manage properly to show a profit, they resort to fraud and lawlessness. . . or, fraud and lawlessness was not detected because bankers are getting better at concealing it.


I'm still in partial shock from the discovery that an agency of the US Government has discovered continuing rampant fraud and violations in bank management, and to date nothing has been done about effectively providing policing of the industry.

In each generation we've had several recessions or panics and that doesn't provide regulators enough evidence to justify prosecution allowed for in existing laws!

I can only repeat the last sentence of the previous post which BiMet carried here.

[vl]

What I ENJOY about your posts O&G is that you reference history a lot. To me, knowing what happened when with who, why and the outcome is-- absolutely critical. Our current mess has multiple conquests rooted in history. It's as if banksters are recalling the best of the worst to overthrown us. Have you ever wondered what happens when banks control ALL of the money? That's part of history too. Just look up ANY nation that no longer exists and you will find a bankster coup as a root cause.
If it don't flow, it don't go, grow, win, place or show. Having a lot just makes it rot.

[Small Biz Owner]

VL is here

[Small Biz Owner]

Still trying for the happy face grrr....

[Small Biz Owner]

Posted by Veteran_Lender on Today at 8:52am What I ENJOY about your posts O&G is that you reference history a lot.

Old & Gray and VL & Bimetal? Couldn't be any better.

Where is Duffminster & Flow5?

USA like the fall of Rome based on the debasement of their currency is what concerns me. Looks like we are headed down the same path? We have lost the silver in our silver coinage in 1965. Lost the copper in our Penny's in 1982. Lost the nickel content in our nickels somewhere along the line also.

I read somewhere that we may lose the penny or have it replaced by plastic coin?

What do you guys think is more important? The debasement of our coinage or the M3 supply?

[Small Biz Owner]

Cool found the spellcheck. Boy do I need it. Off to other boards now

[olderstill]

sbo

"What do you guys think is more important? The debasement of our coinage or the M3 supply?"

It's all tied in together. Give us a solid currency and we won't have significant long term problems; steal value from us and the entire system will capsize. From the other view: the reason we have confidence in long term growth is a solid currency signifying the integrity of the players.

And, VL is right on target! All through history, as far as the written word will take us, the concern of the earliest philosopher/economists (such as Chanakya (350-283 B. C.) the pioneer of economics") was debasement, and it never stopped. The reason contemporary economists do not carry the message forcefully - it's common to every nation on the face of the earth. It's the quickest way to show a strong balance sheet - regardless of the systemic devastation it creates.

[bimetalaupt]

Olderstill,
Money and banking is all about trust.. Trust in the value of the coinage and trust in putting you life earnings into a system to hold your value. The growth lf none M1-m2 has been driven with the small saver.. Loss of banks was the cause in 1931 for the deconstruction of m3. Like the assets of the Rothschild's bank in Austria.. The eastern bonds were worth nothing and so was the bank.

All about trust,
Bi Metal Au Pt

[verrip1]

Dec 28, 2010 22:01:37 GMT -5 bimetalaupt said:

Olderstill,
Money and banking is all about trust.. Trust in the value of the coinage and trust in putting you life earnings into a system to hold your value. The growth lf none M1-m2 has been driven with the small saver.. Loss of banks was the cause in 1931 for the deconstruction of m3. Like the assets of the Rothschild's bank in Austria.. The eastern bonds were worth nothing and so was the bank.

All about trust,
Bi Metal Au Pt

I don't forget what happened centuries ago. However I focus more on what has been happening more recently. Like Argentina. Never in my lifetime will I buy any significant amount of another Argentinian bond, directly or indirectly. I had never thought that I would ever consider that concept with respect to US corporate bonds until Obama gave others priority over bondholders in the GM buyout fiasco. I was caught blind. A US President gives a governmental fiat opposite to a century of fiscal standard, all for political advantage.

Now there is, and should be, hesitancy by potential buyers of US corporate bonds. Do they get protection for their lesser returns as has been the former standard? If not, why buy the damned things? Same IMHO for preferreds. If the gov't can infuse itself into business ownership at will, why the fook should investors trust in the corporate boards' promise to pay out as promised, when the board may, at will, be overridden by government fiat? Remember that bonds and preferreds are longer term investments generally, not short term. Investors need long term confidence in the issuer, not in the vagaries of government.

No, Obama has created an uncertainty which will drive intelligent fixed income investors to overseas investments via his bureaucrats' unwarranted intrusions into the marketplace.

Problem is, he can't take it back, even if he wanted to. He's permanently stuck with this stinking pile of shit. He has set a standard that bondholders are no longer first in line for principal payouts. That is HUUUUUGGGGGGEEEEE.

[bimetalaupt]

Frank,
E-Mail got stuck in the outbox.. It is now sent!!! Looks like Black Rock is out to shake up Wall Street.. Move the trading to New Jersey.

Bi Metal Au Pt

[neohguy]

China is losing/lost patience with their banks:
www.hellenicshippingnews.com/index.php?option=com_content&view=article&id=3789:chinas-premier-vows-to-tackle-lending-frenzy&catid=33:world-economy-news&Itemid=97
China's Premier vows to tackle lending frenzy
Wednesday, 19 January 2011 11:00
Chinese Premier Wen Jiabao vowed on Tuesday to slam the brakes on a credit surge at the start of this year, following reports that the central bank has cut the 2011 lending target for banks by 10 percent.

Wen's comments highlighted growing official concern that a tide of bank loans on the back of rapid capital inflows is complicating the government's efforts to rein in inflation.
"We must avoid abnormal issuance of credit at the start of the year," Wen said, in a statement published on the government's website, www.gov.cn.
Chinese banks had started the year with their usual lending frenzy, handing out 500 billion yuan ($75.6 billion) in new loans in the first week of January alone.
That followed the extension of 7.95 trillion yuan in new loans in 2010, overshooting Beijing's 7.5 trillion yuan target and highlighting the need for more decisive policy tightening.
Wen told a meeting of the State Council, China's cabinet, that the authorities would use a mix of policy tools to ensure reasonable expansion in credit and money supply.
In addition, Beijing would maintain its year-long campaign to curb speculative demand on housing, Wen said.
The Chinese central bank raised required reserves on Friday, the fourth hike in just over two months, or the seventh since early 2010. China also raised interest rates twice last year.

[bimetalaupt]

Germany should set funds aside to prepare for a Greek default, Lars Feld, a designated economic adviser to the German government, was cited as saying in an interview with Handelsblatt newspaper.

“I don’t believe that Greece will manage to deal with its debts without a cut,” Feld, nominated by the Cabinet to a five- member panel of economists who advise the government and a professor at the University of Freiburg, was cited as saying. “And then German guarantees will come due.”

Feld’s comments underscore Europe’s effort to solve the debt crisis that began in Greece and now threatens Portugal and Spain. European Union governments aim to assemble a solution by March, German Finance Minister Wolfgang Schaeuble said Jan. 13. Purchases of outstanding Greek debt and lower interest rates on rescue loans as well as aid for Portugal and guarantees against excessive debt are all being considered, four people with direct knowledge of the talks told Bloomberg News last week.

Greek bonds fell after Die Zeit reported that Germany is considering a plan that would help the Mediterranean nation buy back its own securities.

Greece would be allowed to repurchase bonds with funds from the European Financial Stability Facility made available “with favorable interest conditions,” the German newspaper said, without saying where it got the information. Greek bonds pared their losses after Germany’s Finance Ministry denied it was working on a “restructuring” of Greek debt.

Greece received last year a 110 billion-euro ($148 billion) bailout from the EU and International Monetary Fund.

European leaders should drop their opposition to debt restructuring and include it as part of a larger package to put an end to market unrest, the head of the business caucus of German Chancellor Angela Merkel’s party said.

“I would recommend looking at it very closely, stop declaring it taboo and do the appropriate analysis to see where that would lead,” Kurt Lauk, president of the Christian Democratic Union’s Economic Council, said in a phone interview.

[bimetalaupt]

Jan 19, 2011 7:27:55 GMT -5 @neohguy said:

China is losing/lost patience with their banks:
www.hellenicshippingnews.com/index.php?option=com_content&view=article&id=3789:chinas-premier-vows-to-tackle-lending-frenzy&catid=33:world-economy-news&Itemid=97
China's Premier vows to tackle lending frenzy
Wednesday, 19 January 2011 11:00
Chinese Premier Wen Jiabao vowed on Tuesday to slam the brakes on a credit surge at the start of this year, following reports that the central bank has cut the 2011 lending target for banks by 10 percent.

Wen's comments highlighted growing official concern that a tide of bank loans on the back of rapid capital inflows is complicating the government's efforts to rein in inflation.
"We must avoid abnormal issuance of credit at the start of the year," Wen said, in a statement published on the government's website, www.gov.cn.
Chinese banks had started the year with their usual lending frenzy, handing out 500 billion yuan ($75.6 billion) in new loans in the first week of January alone.
That followed the extension of 7.95 trillion yuan in new loans in 2010, overshooting Beijing's 7.5 trillion yuan target and highlighting the need for more decisive policy tightening.
Wen told a meeting of the State Council, China's cabinet, that the authorities would use a mix of policy tools to ensure reasonable expansion in credit and money supply.
In addition, Beijing would maintain its year-long campaign to curb speculative demand on housing, Wen said.
The Chinese central bank raised required reserves on Friday, the fourth hike in just over two months, or the seventh since early 2010. China also raised interest rates twice last year.

Like Japan of the 1970's... China has huge GDP growth based on debt.. Sell internaionaly at less then local markets..Now japan has had a depression for 20 years and the banks still are not lending...

Just a thought,
Bi Metal Au Pt

[dumdeedoe]

Germany should handle Greece default like any good shylock should: send 2 big Italians over and break the greeks legs...

[bimetalaupt]

Jan 19, 2011 23:09:36 GMT -5 dumdeedoe said:

Germany should handle Greece default like any good shylock should: send 2 big Italians over and break the Greeks legs...

The Greeks will just go one six months working comp , claim it was the Americans and charge the international events to Germany...they tell the world AIG insurance claimed to have a duck that sold them " Get paid with cash.. As good as money"
Bi Metal Au Pt
Greece has a capitalist economy with the public sector accounting for about 40% of GDP and with per capita GDP about two-thirds that of the leading euro-zone economies. Tourism provides 15% of GDP. Immigrants make up nearly one-fifth of the work force, mainly in agricultural and unskilled jobs. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP. The Greek economy grew by nearly 4.0% per year between 2003 and 2007, due partly to infrastructural spending related to the 2004 Athens Olympic Games, and in part to an increased availability of credit, which has sustained record levels of consumer spending. But the economy went into recession in 2009 as a result of the world financial crisis, tightening credit conditions, and Athens' failure to address a growing budget deficit, which was triggered by falling state revenues, and increased government expenditures. The economy contracted by 2% in 2009, and 4.8% in 2010. Greece violated the EU's Growth and Stability Pact budget deficit criterion of no more than 3% of GDP from 2001 to 2006, but finally met that criterion in 2007-08, before exceeding it again in 2009, with the deficit reaching 15.4% of GDP. Austerity measures reduced the deficit to 9.4% of GDP in 2010. Public debt, inflation, and unemployment are above the euro-zone average while per capita income is below; unemployment rose to 12% in 2010. Eroding public finances, a credibility gap stemming from inaccurate and misreported statistics, and consistent underperformance on following through with reforms prompted major credit rating agencies in late 2009 to downgrade Greece's international debt rating, and has led the country into a financial crisis. Under intense pressure by the EU and international market participants, the government has adopted a medium-term austerity program that includes cutting government spending, reducing the size of the public sector, decreasing tax evasion, reforming the health care and pension systems, and improving competitiveness through structural reforms to the labor and product markets. Athens, however, faces long-term challenges to push through unpopular reforms in the face of often vocal opposition from the country's powerful labor unions and the general public. Greek labor unions are striking over new austerity measures, but the strikes so far have had a limited impact on the government's will to adopt reforms. An uptick in widespread unrest, however, could challenge the government's ability to implement reforms and meet budget targets, and could also lead to rioting or violence. In April 2010 a leading credit agency assigned Greek debt its lowest possible credit rating; in May, the International Monetary Fund and Eurozone governments provided Greece emergency short- and medium-term loans worth $147 billion so that the country could make debt repayments to creditors. In exchange for the largest bailout ever assembled, the government announced combined spending cuts and tax increases totaling $40 billion over three years, on top of the tough austerity measures already taken. Greece, however, struggled to boost revenues and cut spending to meet 2010 targets set by the EU and the IMF, especially after Eurostat - the EU's statistical office - revised upward Greece's deficit and debt numbers for 2009 and 2010. Greece's lenders are calling on Athens to step up efforts in 2011 to increase tax collection, shore up public enterprises, and rein in health spending, and are planning to give Greece more time to repay its EU-IMF loan. Greece responded by introducing major structural reforms, but investors still question whether Greece can sustain fiscal efforts in the face of a bleak economic outlook and public discontent.
BUT YOU KNOW THE PHARMACIST ARE GOING ON STRIKES
ATHENS -(Dow Jones)- Greek Finance Minister George Papaconstantinou said Wednesday that there were no talks on debt restructuring and he expects a comprehensive European Union solution to the financial crisis engulfing some members within two months.

Early Wednesday, there were press reports the German government was considering a plan that would allow Greece to retire some of its debt early, using subsidized credits from the European Financial Stabilization Facility, or EFSF.

Denials were issued by both Greek and German officials, however.

"There are no talks on debt restructuring. In the European Union there are tough and complex discussions that are ongoing, with various views, and in two months I expect there will be a comprehensive solution to issues like the EFSF and the crisis in some member states," Papaconstantinou said in a live interview to private Greek television channel Mega.

The minister declined to directly address comments by Deputy Prime Minister Theodoros Pangalos on Monday that Greece should try to extend the maturity on all its debt and not just the EUR110 billion bailout funds from its international lenders of last resort. This is the second time maverick politician Pangalos has made the argument in the past few months.

"Official statements on matters of such importance as the national debt should be left to the finance minister or the prime minister," Papaconstantinou said.

The finance minister also outlined that the ongoing discussions within the EU extend to E-bonds--a unified euro-zone debt-issuing mechanism. The talks also extend to tougher supervision of credit ratings agencies and rethinking credit-default swap regulation, according to the minister.

Three major ratings agencies--Standard & Poor's, Moody's Investors Service and Fitch Ratings--have downgraded Greece to junk territory.

"There are also talks on the cost of bailout mechanism borrowings, for the EFSF as well as our own International Monetary Fund and EU bailout, because the interest rates are unsustainable in the medium term and its on the table because we have regained much credibility with our efforts," Papaconstantinou said.

Greece pays an average interest rate of about 5.2% currently on its EUR110 billion IMF-EU bailout, which was agreed on in May 2010 to stave off certain insolvency.

The finance minister said that "many countries in the EU want a comprehensive solution because we cannot continue with this level of market instability and expect the European Central Bank to repeatedly intervene and calm the markets."

The ECB has a temporary program of intervening in the secondary bond markets of weaker Euro-periphery states and was aggressively buying securities last week to contain rising borrowing costs--and spreads over the benchmark 10-year German bund--down in countries such as Ireland, Portugal and Greece.

When questioned on the sustainability of Greek debt dynamics, because even the IMF projects that Greece's debt-to-gross domestic product ratio will peak at 158% in 2013, Papaconstantinou said that the solution for the debt-laden Mediterranean country was "to run primary surpluses of 5 to 6% every year for many years to come, and we also need economic growth."

Papaconstantinou repeated his recent assurances that the socialist government would push on with reforms to open up hundreds of closed Greek professions, as demanded by the IMF and the EU, since it is a part of the conditions for receiving further tranches of the EUR110 billion bailout.

"The reforms to liberalize closed professions are restructuring reforms needed to make the local economy more competitive, to create commercial dynamism and open up employment opportunities for young people," Papaconstantinou said.

Earlier Wednesday, the Greek cabinet approved a bill to lift a wide range of restrictions on the entry and operation of professions such as lawyers, auditors, engineers, notaries public, accountants and architects. The pharmacists profession will also be opened up but with a separate bill from the Ministry of Health.

Greece will be discussing its proposed legislative initiative with the IMF and the EU for their approval before it is submitted to parliament for a final vote.

"We will be abolishing things like fixed minimum fees, caps on the number of licenses and geographic restriction for hundreds of professions," Papaconstantinou said.

Pharmacists on Wednesday began a series of 24-hour strikes to protest against the reform. On Thursday, attorneys will join them in a three-day strike and other professional groups are also expected to take to the streets in opposition to the reforms. NO DRUGS

"We will push ahead with this reform because Greek citizens will get better services and it will create new wealth for the economy," the finance minister said.

[dumdeedoe]

Have they looked up the definition of Union yet? Seems like it should be called the European Association.... Not union....

[bimetalaupt]

THE ECB IS NOW A TWO MAN TUG-OF-WAR WITH THE GERMAN WINNING THE INFLATION AND FRENCH WINNING THE FIGHT FOR RECOVERY!!!

The head of the German central bank, Axel Weber, is openly critical of the way the European Central Bank has handled the euro's debt woes. He is fighting to uphold purist monetary principles that are untenable in the current crisis. His chances of succeeding Jean-Claude Trichet as ECB chief are waning as a result.

Jean-Claude Trichet had chosen a complicated topic for his presentation. The president of the European Central Bank (ECB) stood on a podium in Frankfurt's Alte Oper opera house and talked about "macro-prudential regulation," "correlated risk positions" and "anti-cyclical capital buffers." These are dense subjects even for the bankers and financial experts in the audience, and a leaden sense of fatigue soon spread throughout the hall. Many listeners sank deep down into their seats, some stretched out their legs, and a few had drifted off to sleep.

One person, however, was wide awake in the front row. Axel Weber, the president of Germany's central bank, the Bundesbank, had brought along some work from the office. He fished documents out of a brown envelope, leafed through notes, studied diagrams and tables, and corrected manuscripts. Then he turned to the two smartphones that were lying on the table in front of him. Weber checked e-mails and the news, and typed out orders. Finally, he pushed back his chair, rushed over to his press officer on the other side of the room, and discussed how he should react to an agency report that he had just received.



Weber had accomplished quite a bit by the time Trichet finally stepped down from the podium amid a round of subdued applause. On the way to his seat, the ECB president had to pass by Weber. The German and the Frenchman shook hands, but the gesture seemed wooden and awkward. They didn't smile, they didn't look at each other, and they didn't talk. Then they walked off in opposite directions.

Last week, the European Central Bank reaffirmed its decision from last May to buy up government bonds from ailing EU member states to support the euro. At the time, Weber had voted against the move and, riding roughshod over all the usual customs, had made his vote public.

The Pope vs Martin Luther

Since then, the euro zone has had one more problem: A religious war of sorts has erupted among the top officials of Europe's monetary authority, with Trichet cast in the role of the pope ("there is only one explanation and I give it") and Weber as Martin Luther ("I always go my own way, and it has served me well").

The two rivals are fighting with interviews and speeches -- with calculated indiscretions and public admonishments. The battle is about the currency's stability, the European Central Bank's image of itself and, last but not least, the presidency of the ECB.

Weber wants to succeed Trichet next fall as the head of the ECB -- and many people are wondering if that is still possible now that the German has become one of the most controversial figures in the euro crisis. His supporters cheer him as a defender of German virtues in monetary policy, while his critics accuse him of promoting himself at the expense of the common currency.

Weber is fighting an election campaign the likes of which Europe has never experienced before, and it's clear that his campaign will force German Chancellor Angela Merkel to make a difficult decision: Should she support a man who is engaged in a bitter feud with the current incumbent? Does the European Central Bank need an agile diplomat or an intractable guardian of stability at the helm? And most important of all: Does it help the euro if Merkel endorses Weber's candidacy?

For Helmut Schlesinger the answer is clear: "Weber is right," he says, "with its decision, the European Central Bank has crossed the Rubicon."

Schlesinger is one of Weber's predecessors at the Bundesbank. He spent two decades on the bank's board and was its president from 1991 to 1993. He was one of the bank's legendary currency watchdogs and had a reputation for sniffing out inflation from under every pebble. In 1992, Schlesinger refused to lower German interest rates to keep the British pound in the European Monetary System. At the time, the political leadership in London accused him of "sabotage."

Schlesinger is now 86 years old. His hearing is not as good as it used to be, and he has to take off his glasses when he wants to write something down. But he's still on top of his game when it comes to monetary policy. The latest press reviews from the Bundesbank and economic journals are lying on his living room table. Schlesinger had hoped that the European Central Bank would unwaveringly pursue the same policies as the Bundesbank. But he has had his doubts ever since the euro started to stagger under the pressure of the current crisis.

"It was right to introduce a bailout package for Greece and the euro zone," he says, "but wrong for the European Central Bank to commit itself by showing a willingness to purchase government bonds."

In Schlesinger's opinion, this breaks a taboo commonly referred to in German as the Mefo bond. Mefo is an acronym for a shell corporation called the Metallurgische Forschungsgesellschaft (Metallurgical Research Company), which was founded by the Nazis. The company issued bonds which the central bank of the German Reich used in the 1930s to finance the country's military buildup. In order to ease the burden on the government budget, the Nazis started up the printing presses.

Schlesinger warns that something similar is now threatening to happen in the euro zone. "Apparently, outside Germany they haven't realized to what extent central bank financing of the (member) states erodes confidence in the value of the currency," he says. "This creates a dangerous incentive to continue to increase government debt."

The staff at the Bundesbank would have us believe that Schlesinger's cause is also Weber's cause. Their interpretation is that here is a man who is fighting as a matter of principle, out of a deep sense of concern for the stability of the currency and the independence of the ECB.

The image painted here by Weber's close advisers is a nice picture. But is it accurate?

It's a sin to print money to prop up a state budget -- that much is certain. The problem is that, in the wake of the financial crisis, this sin has been committed by the central banks of many countries, including the US and the UK. Shouldn't we also be allowed to temporarily violate principles in the euro zone if it means that this will save the common currency?

What's more, in his struggle to uphold principles, Weber considers it justified to break the rules himself, namely those of his office. As the German representative on the Central Bank Council, he should actually lobby for his cause internally, seek allies behind closed doors and otherwise behave in line with the fine traditions of the European Central Bank: Anyone who loses a vote still has to outwardly support the majority decision.

But Weber doesn't see himself as a diplomat, as he has made clear on a number of occasions. Weber has colored his term in office with the know-it-all air of the professor. He is not fighting for majorities -- he is playing to the experts in the crowd. He's not seeking to broker compromises -- he wants to prove that he is right. "It's not true that Weber believes that he is in possession of the truth," says someone who has known him for a long time, "he believes that he is in possession of the absolute truth." In late November, Weber gave a presentation at Berlin's swanky Hotel Adlon -- an excellent opportunity to show his mettle as a monetary statesman. Weber professed his commitment to "the euro -- the project of the century," juggled with jargon like "bondholders' squeeze" and "corporate governance," and called for realistic exchange rates between China and the US.



It was a successful presentation until a final question came from the audience. Max Otte, a professor of business administration at the University of Worms and a book author ("The Crash Is Coming"), tauntingly reminded the Bundesbank president that he had just noted the benefits of realistic exchange rates. Wouldn't it make sense, Otte asked, in this situation for Greece to leave the euro and devalue its currency?

There are roughly a dozen rebuttals to this question. Weber knows them all; he only had to choose one. But the head of the Bundesbank doesn't appreciate it when someone points out that he has contradicted himself. So he confronted his questioner head on, with sharp and cutting remarks. Weber said testily that it was his impression that Otte spent "too much time at political forums" instead of talking with industry representatives. Otherwise he would know to what extent German industry stands behind the euro, he said.

A Talent for Making Enemies

Weber loves to humiliate his adversaries -- and he takes it in stride that this causes the ranks of his opponents to continue to grow. When Weber rushed out of the hall after his presentation, Otte, shaking with rage, tried to intercept him -- and yelled in a choked voice after the Bundesbank president that he knew very well what the business sector thinks. After all, he said, he was an entrepreneur himself.

Anyone looking for examples of Weber's talent for making enemies only has to ask around at the European Central Bank. His opponents there cite a long list of transgressions. They reproach him for always voicing divergent opinions when Trichet makes public appearances. They complain that he makes far less critical comments at internal meetings than in public. They carp that in the past he didn't always so scrupulously adhere to his own noble monetary principles. They call him a "wannabe hawk."

But the more resistance the head of the Bundesbank faces, the more unrelentingly he plays the role of the rebel. When Trichet recently criticized Germany's plans to make private investors share in the cost of government bailouts, Weber objected once again. He said that it made sense "not to make taxpayers foot the bill alone" for future cases of default.

Weber sees himself as the champion of Germany's interests and, indeed, the conflict in the upper echelons of the European Central Bank says a lot about the overall dilemma of Berlin's euro policy. The Germans often take the right approach on the issues, but they can't manage to turn this into a position that wins majority support. They are isolated, making themselves unpopular, and caught on the defensive -- just like Weber.

ECB Risks Becoming 'Bad Bank'

Since last week, it has been clear that the European Central Bank will, at least for the time being, continue to pursue its controversial bond purchasing program. However, in contrast to rumors that had been circulating earlier on the financial markets, the currency watchdogs have not committed themselves to expanding the program.

There are good reasons for this -- buying bonds entails significant risks. If the central bank purchases government bonds of troubled states on a large scale, it brings additional money into circulation. To avoid fueling inflation, the monetary authority in turn has to issue other bonds on the market to soak up the added liquidity. Economists call this procedure "sterilization."

Although this allows the central bank to limit the amount of money in circulation, it also creates an additional problem for the institution: the proportion of so-called junk books in its balance sheet increases. Those bonds are worth far less than their face value. Deutsche Bank chief economist Thomas Mayer warns that the ECB could turn into a "bad bank," with all the risks that entails. If the junk bonds end up having to be written down, he argues, this would also reduce the central bank's equity -- and the member states of the euro zone would have to inject fresh capital. This would spark a much larger spiral of debt and inflation.

Indeed, it was wise that the European currency watchdogs did not hastily expand the program last week. But it was just as intelligent not to deprive themselves of their ultimate weapon, because they may still need it if the turbulence surrounding the euro continues.

This is what Weber and the Bundesbank fail to appreciate in their campaign: The crisis of the common currency creates new priorities. Europe has to defend the euro, even at the cost of temporarily suspending proven principles.

A few weeks ago, Weber attended a banking congress in Frankfurt. Next to him sat Jörg Asmussen, a state secretary in the Finance Ministry. The two men greeted each other with a round of backslapping, spoke tête-à-tête for a long time, and showed the audience how perfectly they agree with each other, right down to the rhetorical figures of speech in their presentations: "Now I'm turning into the final curve," said Asmussen as he concluded his presentation. "Now I'm turning into the final curve," Weber said in his speech only half an hour later.

Sixteen years ago, the two men worked together at the University of Bonn, Weber as a professor of economic theory, Asmussen as a research associate. There was also another associate named Jens Weidmann.

The three men can pride themselves on building one of the most successful career networks in German economic history. When German Finance Minister Hans Eichel was looking for a new Bundesbank president in 2004, Asmussen -- who was a department head in the finance ministry at the time -- recommended Weber. Later, when Chancellor Merkel was looking for a new economic adviser, Weber recommended Weidmann. Now Asmussen and Weidmann are working in the German government to pave the way for Weber to become the ECB president.

Weber's Chances of Getting ECB Top Job are Waning

Until recently, it looked as if they were still in the running. Early this year, the EU governments made Portugal's Vítor Constâncio vice president of the ECB. In accordance with European rules on proportional representation, it was clear that the next president would have to come from a large northern member state, in other words, either Germany or France. Since the French can't occupy the top position after Trichet, however, the German candidate looked like he was in a strong position. Shortly thereafter, Paris said that it was also amenable to the idea of Weber as president.

That has changed. Ever since the conflict between Trichet and Weber escalated, the German's chances have dropped sharply. Every week, the French government brings up the names of new alternative candidates, and Chancellor Merkel has also not yet decided if she wants to fight for Weber.

According to government sources, if Berlin aims for the position, there will be no way around Weber as its candidate. But the question is whether Berlin really wants the office, especially considering the current difficult situation. It would also involve the usual game of string-pulling between European governments: If Merkel wants to ensure that Weber gets the job, she has to make concessions elsewhere.

As for Weber himself, he appears to be playing the tragic hero who is sticking to his principles: "I'm thinking of my current job," he says, "not the next one."

[bimetalaupt]

back up to the Tug-of-War !! Is it a Lutheran vs Jew vs RC thing in Europe.. That is why many of our for fathers came to America to get away I started to Post the item from the Harvard Professor( Dr. Robert Barro, PhD) that Hold Harvard 's Seat Paul Warburg on the subject .. Just too strong for this Board.. Looks like it is going bad again.. Now they say 750 Billion EURO: Europe's rescure bond issue is not enough rescuer money to save eureapdan

The good news is that Portugal and Spain have both held successful bond sales this week. The bad news is that the European Commission and euro-zone leaders appear hopelessly divided on the size of the euro-zone rescue fund. German papers on Thursday decry the continuing lack of unity in the midst of the debt crisis.

There was a small glimmer of hope amidst Europe's economic gloom this week as first Portugal and then Spain managed to sell bonds at lower than expected interest rates. Yet uncertainty over the extent of the euro zone's debt crisis and division within the currency union's leadership about how to address it means that investors are still nervous.

Europe has failed to forge a common stance on whether or not its massive rescue fund needs to be increased, despite the fact that so far only Ireland has availed itself of the loans. While Brussels wants to expand the mandate and lending capacity of the fund, European Union leaders, particularly in Berlin and Paris, are balking at contributing even more to bailing out struggling euro-zone partners.



On Thursday, Berlin reiterated its position that the €750 billion rescue fund, known as the European Financial Stability Facility (EFSF) did not need to be extended at the moment. Government spokesman Steffen Seibert told Reuters that "the discussion about increasing the euro rescue fund is not pending," adding that the current fund was adequate to fulfil its purpose.

The European Commission has been pushing for an increase to the fund. On Wednesday, Commission President Jose Manuel Barroso was again on the offensive. "We consider that its effective financing capacity must be reinforced and the scope of its activities widened," he told reporters in Brussels as he opened a new round of policy coordination between the EU executive and the governments.

On Wednesday, Chancellor Angela Merkel did not directly comment on his statement but she vowed at a news conference that Germany would do "what is necessary" to safeguard euro-zone stability. Merkel, though, is likely to face fierce opposition from within her own party, which is facing tough regional elections this year, to any moves which would increase Germany's contribution to the fund.

France has also been fiercely resistant to boosting the EFSF fund. On Thursday, however, French Prime Minster Francois Fillon said that euro-zone members, especially France and Germany, were ready to do "absolutely everything" for the bloc's economic stability.

German Finance Minister Wolfgang Schäuble has said that euro-zone governments were working on a "comprehensive package" to solve the deeply rooted debt crisis. On Wednesday he told reporters that the package could be agreed upon by February or March. "We can't just solve the problems over the short term -- if there are short-term problems -- but also over the mid term," he said.

The pressure on Portugal in recent days has been intense. Lisbon, though, surprised many on Wednesday by selling 10-year bonds relatively easily. On Thursday, Spain followed with a successful five-year debt sale, showing that investors seem more confident that the euro-zone governments would agree to bold new measures to deal with the euro bloc's debt crisis.

Meanwhile in a widely expected move, the European Central Bank on Thursday left its main interest rate unchanged at 1 percent for the 20th consecutive month.

German newspapers on Thursday take a look at the ongoing euro-zone crisis and many are critical of the lack of unity within the bloc.

The Financial Times Deutschland writes:

"Barroso's proposal to increase the EU rescue fund comes at the wrong time. One could have talked about such a move if Portugal actually had to ask for EU help. But the way he did it only achieved one thing: making investors even more nervous. This kind of approach is not to be interpreted as a sign of strength, but as an indication that the EU is already preparing for bankruptcies in Spain, Italy and Belgium."

"Chancellor Angela Merkel and French President Nicolas Sarkozy are right to oppose Barroso. However, this means that once again the EU appears divided, something that also does little to calm the situation."

"In the long term, the euro zone will only hold together if there is a closer coordination of economic and financial policy among EU states so that imbalances do not occur in the first place."

The center-right Frankfurter Allgemeine Zeitung writes:

"Only a small part of the €750 billion joint fund has been accessed by Ireland (which above all is rescuing Irish banks). However, that doesn't faze Barroso, whose motto is: 'We defend the euro, whatever the cost.' Yet why are countries with better credit-worthiness, such as Germany, allowing themselves to be pushed around by Barroso? Does Chancellor Merkel not see that Germany is being made a hostage of the banks, which simply want to pass on their credit risk to the taxpayers? If access to the funds is no longer connected with strict conditions in the future, then that will please not only the bonus bankers but also the indebted euro countries. Living on credit will then still be rewarded."

The business daily Handelsblatt writes:

"There seems to be great fear among the political leadership of the euro zone that other countries could also buckle under the pressure of the markets. That is the only way to explain why the European Commission and euro-zone states are seriously considering increasing the euro rescue fund by several hundred billion euros."

"Regardless of how much the credit facility for broke euro states is increased: It cannot get rid of the severe debt crisis in the euro zone. The currency union has only granted a few years of breathing space to those countries who are now in trouble due to years of serious economic and budget mistakes. Greece and Ireland have been given a reprieve, in order to correct failures and find their way back to the global economy."

"The fate of these countries should act as a warning to other euro states. It should motivate all governments to now quickly reduce their huge debt burdens. … Greece, Ireland and Portugal present striking examples of what happens when a country becomes a hostage of its creditors on the financial markets. That could also happen to seemingly stable countries if governments do not impose tough cuts now -- including Germany. The biggest EU state, just like the others, has for years continued to take on more debt. The financial markets are now presenting the bill for this policy. The people of Europe will have to tighten their belts for a long time to come in order to pay it off."

The center-left Süddeutsche Zeitung writes:

"Contrary to expectations, Portugal was able to raise new credit on the financial markets without any problems. Despite these reassuring signals, the president of the European Commission, Jose Manuel Barroso, could think of nothing better to do than demand a bigger EU rescue fund. More money for Europe even though Portugal has just proved that it doesn't need the money? Germany and France are rightly annoyed. The new cacophony is exactly the wrong message for investors: Europe proves once again how weak it is at just the moment when strength is required. This lack of unity is an invitation to speculators to play their game with individual euro states."THIS IS JUST NUTS... I AGREE WITH AXEL WEBER... IT WILL TAKE TWENTY YEARS OF SAVING TO PAY OFF THE NEW DEBT..IMHO

"Europe has to show determination that it will defend the common currency, a currency that is providing Germany with so much growth and employment at the moment. Europe has to make it clear that it will help struggling member states -- without constantly talking about extra billions or technical changes to the rescue fund. And Europe has to establish rules that will force all of the euro governments to pursue solid economic policies and to introduce cuts and reforms that will create more jobs and promote international competitiveness."

"So far, the taxpayers in Germany and France have not lost any money. And if everything goes according to plan, they will get back the loans with decent interest added. But this plan will only succeed if Europe doesn't continue to seem like a headless chicken. The cacophony could then lead directly to a disaster ending with the collapse of the common currency."

The left-leaning Die Tageszeitung writes:

"The question is not if Portugal should accept the EU rescue package -- but when."N JUST NUTS .. AGAIN.. IT IS ALL ABOUT OVERSPENDING BEFORE THE CRASH IN 9/15/2008 NOT THE SUB PRIME MESS THEN TRIED TO PIN THIS PROBLEM ON.. NEED TO SAVE LIKE GERMANY AND SWEDEN.. THEIR BANKS DO NOT WANT ANY PART OF THESE BAD DEBTS.. IMHO IT IS A MESS

"However, the term can be misleading. The EU's financial help may be called a 'rescue package' but it would be no rescue for Portugal. That's because even EU countries demand an inflated interest rate of 5.8 per cent, as Ireland and Greece are finding out to their dismay. Just like these countries, Portugal will remain caught in a debt trap, even if it does accept help from the EU."

"The €750 billion bailout package is unparalleled -- and yet it will be ignored by investors. Risk premiums are increasing as if nothing happened and infecting more and more new countries. Now Belgium is deemed to be in danger too."



"The Commission is helpless: 'More of the same' seems to be the motto. If a bailout fund of €750 billion is not enough then it must be increased. But it is very doubtful whether sheer quantity will help. It is obvious to investors that several European countries are heading for bankruptcy."

"And that is why there are three measures that the EU won't be able to avoid taking in the long term: First of all, it must lower the punitive interest rates on their loans. Secondly, some countries need partial debt relief. This is certainly the case for Greece and Ireland and probably for Portugal as well. And thirdly, the periphery countries must become competitive. This can't happen as long as Germany is committed to wage dumping."

AS I STATED IN DECEMBER... THERE WAS A VERY BAD THING COMMING UP AND THAT WAS THE REASON FOR THE SWAP LINE BEING INCREASED OVER THE HOLIDAYS..
“Crises and Recoveries in an Empirical Model of Consumption Disasters”
Barro, Robert J., Nakamura, Emi, Steinsson, Jon, Ursúa, José F., April 2010.
“Religious Conversion in 40 Countries”
Barro, Robert J., Hwang, Jason, McCleary, Rachel M., July 2009.
“Religion and Economic Growth”
Barro, Robert J., McCleary, Rachel M., April 2003.
www.economics.harvard.edu/faculty/barro/workpapers_barro

[bimetalaupt]

Axel Weber is as mad as a wet hen over inflation.. but inflation is under 2%.. It is all about risk that inflation will increase.. It is all about productivity.. And the USA is the world leader in inflation controlling Productivity rather then Germany. But the problem is al;so banking is not working well on either side of the POND...

European Central Bank Governing Council member Axel Weber said he expects inflation rates in Germany and the euro region to be below the bank’s 2 percent limit in the medium term.

“In the medium term, inflation rates below 2 percent should still be expected for the euro area as well as for Germany,” Weber, who heads Germany’s Bundesbank, said in a speech in Frankfurt today. “Inflation risks are still more or less balanced but upside risks could continue to increase. Therefore, the ECB council still considers the current interest rates appropriate. At the same time, future price developments have to and will be monitored very carefully.”

The ECB last week moved inflation fighting back into focus after consumer-price gains in the single-currency region breached the bank’s price-stability threshold for the first time in more than two years. Widening divergences between euro-region economies and a fiscal crisis that’s threatening to engulf the Iberian peninsula make it harder for the ECB to set its “one- size-fits-all” policy.

“Germany is benefitting considerably from the strong recovery of the global economy, especially in Asian emerging markets,” Weber said, adding that German exports to China have increased 80 percent from pre-crisis levels. After a temporary slowdown of momentum, “foreign demand is once again providing stronger impulses.”

While exports won’t grow at the same pace as last year, investment activity will “strongly increase” and private consumption should “rise considerably,” Weber said. Unemployment will average less than 7 percent in 2012, down from an average 7.7 percent in 2010.

The German economy, Europe’s largest, expanded 3.6 percent last year, the most since records for a reunified Germany began in 1992, and the Bundesbank forecasts growth of 2 percent this year. By contrast, the Greek, Irish and Spanish economies shrank last year, according to European Commission estimates, and Portugal’s is forecast to contract this year. Who is Germany going to sell to.. Sell Cars to the USA???

[bimetalaupt]

On the Treasury TARP.. They have been making money.. Like 27% profit so far!!!

WASHINGTON (Reuters) – The U.S. Treasury's toxic asset funds have gained 27 percent since they were created to help revive the mortgage-backed securities market, according to data expected to be released later on Monday.

As part of the government's deeply unpopular $700 billion bailout program, the funds were set up to remove illiquid securities from banks by matching private capital with taxpayer money and Treasury loans via funds run by private investment managers.

Although furor over the bailout helped Republicans win control of the House of Representatives in the recent election, the government has been recouping taxpayers' money.

The eight toxic asset funds, run by asset managers such as BlackRock Inc, Invesco Ltd and Marathon Asset Management, are all profitable.

Since the funds were established in 2009, they have used about $5.2 billion of Treasury's equity investment to buy toxic assets. As of the end of 2010, the funds have gained $1.1 billion to about $6.3 billion, according to the data.

Including some $300 million in equity distributions, the Treasury's investment increased by 27 percent or $1.4 billion, according to the data.

The Treasury Department had initially proposed buying up to $1 trillion in illiquid mortgage-related securities to help clean up banks' balance sheets. But the program was scaled down considerably as banks proved they could attract private capital in both the equity and debt markets without first selling off illiquid securities.

As of December 31, the funds had about $29.4 billion of purchasing power and had drawn down about 70 percent of the total amount, according to the data.

The Congressional Budget Office has estimated the ultimate cost of the bank bailout, or the Troubled Asset Relief Program, will be as low as $25 billion.

[bimetalaupt]

HERE IS A VERY LARGE SHOCK.. MOST OF THE BONDS ARE OWNED BY INDIVIDUAL INVESTORS AND JAPANESE BANKS.. ONLY 5% ARE OWNED OUTSIDE JAPAN!!!! JAPAN IS GETTING OLDER AND RUNNING OUT OF MONEY .. ALSO HAS A 200% DEBT / GDP RATIO.. AA- BY S&P.. Bi Metal Au Pt...

The biggest takeaway from S&P's surprise downgrade of Japan's long-term sovereign debt rating to AA-minus may be the speed at which the bond vigilantes could switch their focus away from Europe-where it's been for one year-to Japan or the UK or the United States.

The yen has dropped around the world. But, truth be told, this is one event world markets are shrugging off. The yen is near 15-year highs: Tokyo even intervened itself in an attempt to weaken it last year, so Japan's exporters are probably smiling today.
javascript:adds("%20%20")
Make no mistake, with Japan's government forecasting its debt will rise to twice its GDP this year, the situation is grave-a "fiscal dead end" was how Tokyo's Economy Minister recently described it. This may strengthen Kaoru Yosano's hand to, say, raise the national sales tax above 5 percent.

But traders point out that the vast majority of Japan's sovereign debt pool, likely to reach a staggering $10.5 trillion this year, is owned by domestic investors. Foreigners only hold around 5 percent of Japanese government bonds.

So there's very little opportunity for mass liquidation or short selling that might drive yields to potentially unsustainable levels, as happened in Europe. We'll see how Tokyo's stock market opens to the news tonight but yields on 10-year JGBs appear to have barely moved.

[scaredshirtless]

Jan 24, 2011 16:46:55 GMT -5 bimetalaupt said:

On the Treasury TARP.. They have been making money.. Like 27% profit so far!!!

WASHINGTON (Reuters) – The U.S. Treasury's toxic asset funds have gained 27 percent since they were created to help revive the mortgage-backed securities market, according to data expected to be released later on Monday.

As part of the government's deeply unpopular $700 billion bailout program, the funds were set up to remove illiquid securities from banks by matching private capital with taxpayer money and Treasury loans via funds run by private investment managers.

Although furor over the bailout helped Republicans win control of the House of Representatives in the recent election, the government has been recouping taxpayers' money.

The eight toxic asset funds, run by asset managers such as BlackRock Inc, Invesco Ltd and Marathon Asset Management, are all profitable.

Since the funds were established in 2009, they have used about $5.2 billion of Treasury's equity investment to buy toxic assets. As of the end of 2010, the funds have gained $1.1 billion to about $6.3 billion, according to the data.

Including some $300 million in equity distributions, the Treasury's investment increased by 27 percent or $1.4 billion, according to the data.

The Treasury Department had initially proposed buying up to $1 trillion in illiquid mortgage-related securities to help clean up banks' balance sheets. But the program was scaled down considerably as banks proved they could attract private capital in both the equity and debt markets without first selling off illiquid securities.

As of December 31, the funds had about $29.4 billion of purchasing power and had drawn down about 70 percent of the total amount, according to the data.

The Congressional Budget Office has estimated the ultimate cost of the bank bailout, or the Troubled Asset Relief Program, will be as low as $25 billion.

Your talking about a 5 to 6 billion piece]of a $700 billion TARP. Correct?

Seems miniscule to me.

And we've bailed them out in SO MANY ways!!! And continue to with practically free money at the TOTAL expense of sensible savers - who we could use about 10 million more of. Now...

The headline doean't match the impact - JMO...

[bimetalaupt]

S.S.
I read they total amount of $29.4 Billion that is a leverage of $5.2Billion and they made $1.4 billion profit so far on the 70% of the $29.4 Billion..

I take it that the 0.3*29.4 = $8.82 Billion remains open to buy TARP assets... It is well know the $700 total has never been used but I do not know what the total amount used is so far...

Are You back from H.K.,, Eric want to talk to you about something.

[bimetalaupt]

Jan 20, 2011 19:21:51 GMT -5 dumdeedoe said:

Have they looked up the definition of Union yet? Seems like it should be called the European Association.... Not union....

SS,
But they all have their UNIONS!!! to make happy.. they make up 70% of the voting adults from the post war generations...Looks at France or Germany.. This chic is "MAD"
for the USA it looks like the increase in interest rates is having its effect on M3.. Large Savings via $250,000 + CD's Banks are starting to raise rates and more CD's are being Turned over!!! at a better rate..

Bruce[glow=red,2,300] Who Me ..save money at Costco [/glow]
The European Union's financial bail-out fund - used to rescue the Irish Republic - could be enlarged, the French finance minister says.

Speaking at Davos, Christine Lagarde said leaders were discussing expanding the European Financial Stability Facility (EFSF) if needed.

The EU may also use the EFSF to buy back national bonds, she said.

There have been concerns that more funds would be needed to help indebted countries such as Spain and Portugal.
'Embrace competitiveness'

Speaking later on Friday at Davos, German Chancellor Angela Merkel reiterated her warning that "indebtedness" was the "biggest danger" for Europe's prosperity.

"We have got to work against that and embrace competitiveness," she added.

She said that markets were still not totally convinced that indebted eurozone nations would be able to pay what they owe.

German Chancellor Angela Merkel: "Excessive public debt is the greatest threat to prosperity in Europe"

Mrs Merkel said that despite speculators being blamed for the problems being experienced by some economically troubled European nations, the speculation had a "root in reaility".

Her formula for the future economic prosperity of Europe was for countries to reduce debt, boost competitiveness, and work more closely politically.

She said that other countries should follow Germany's example of austerity, adding that "savings measures and growth are not opposites".

In addition, Mrs Merkel said it was crucial that the Doha Round of world trade talks, which have been stalled for a decade, was agreed this year, and also that a new enhanced European stability and growth pact was put in place.
" KEEP THE JOKE PER FRED.. "WHO ME ..EFFICENT NEVER.. IT IS AGAINST THE UNION RULES".. I MIGHT WORK MYSELF OUT OF A JOB!!!!

Greek Prime Minister Papandreou: Default is "out of the question"

It came after news that finance ministers have been examining ways to use the whole 440bn euros ($603bn; £379bn) in the EFSF fund, set up in May last year to try to protect the eurozone by rescuing troubled member states.

It is financed by the eurozone members themselves and has been used to support the Irish Republic.

However, immediate fears about the need for any future bail-outs have ebbed recently after both Portugal and Spain raised money at lower interest rates than had been feared - a sign of improving investor confidence.

"We are working on making the EFSF more efficient, more flexible, and if it needs to be bigger for that matter, so be it," Ms Lagarde said.
'Working document'

Also on Friday a spokesman for EU economic affairs commissioner Olli Rehn said lending Greece money to buy back its bonds on the open market was "one option" being examined.

It came after Greek finance minister George Papaconstantinou, also in Davos, said discussions about such an option were taking place.

Greece's bonds are trading below their face value, so if it had the available funds the country could buy its bonds back at a discount and cut its debt.

However, the option is not a proposal but merely an internal "working document", Mr Rehn's spokesman said.

Greece was rescued from bankruptcy last May thanks to a 110bn-euro rescue loan package from eurozone nations and the International Monetary Fund.

However, it has yet to access EFSF funds.
'One avenue'

The EU's leading economic power, Germany, has led calls resisting an increase in the size of the EFSF, with opponents saying that increasing the fund may encourage economic laxity.

Meanwhile, Ms Lagarde also said the possibility of buying back national bonds was being discussed by EU finance leaders.

"I don't think there is yet general consensus because it's again work in progress," she said.

"But it's clearly one avenue for the EFSF to actually get involved in markets."

This could help eurozone countries, such as Greece, to borrow much-needed funds at lower interest rates than are currently being demanded by investors.

Attachments:

[bimetalaupt]

Jan 20, 2011 19:21:51 GMT -5 dumdeedoe said:

Have they looked up the definition of Union yet? Seems like it should be called the European Association.... Not union....

OK just look at the baby steps..Who did not do what..Inflation ahead..

Now that ECB President and monetarist cat Jean-Claude Trichet has Thrown the ECB Rulebook Out the Window, battle lines have formed in regards to defending the Euro.

Please consider Weber Draws Battle Lines as Pressure Mounts on ECB

Bundesbank President Axel Weber fired the first shot in a brewing debate over how far the European Central Bank should go to defend the euro.

As the single currency plunged yesterday, Weber said the threat of contagion from Greece’s fiscal crisis doesn’t merit “using every means,” rebuffing calls for the ECB to consider buying government bonds.

ECB President Jean-Claude Trichet is under pressure to do more to calm markets after the pledge of a 110 billion-euro ($142 billion) bailout for Greece from euro-area countries and the International Monetary Fund failed to assuage investors’ concerns.

While Weber’s comments suggest he won’t agree to asset purchases, some economists said that remains an option if the crisis worsens. The ECB could also reverse the withdrawal of emergency lending measures used to fight last year’s recession and dilute collateral rules further.

Merkel’s Coalition Calls for EU ‘Orderly’ Defaults

Trichet is also battling Merkel’s Coalition Call for ‘Orderly’ Defaults

German Chancellor Angela Merkel’s coalition stepped up calls for allowing the “orderly” default of euro-region member states burdened with debt to avoid a repeat of the Greek fiscal crisis.

Floor leaders of the three coalition parties agreed in Berlin today to put a resolution to parliament alongside the bill on Greek aid calling for the European Union to revise rules for the euro to put pressure on countries that run deficits.

Merkel, who faces elections in Germany’s most populous state on May 9, is seeking to shift focus from the Greek bailout to drawing lessons from the euro’s biggest crisis. An “orderly insolvency” process would ensure that creditors participate in any future rescue, she said on ARD television yesterday.GREEK POPULOUS HAVE SAID IT OUT LOUD..WE WILL NOT CUT SPENDING.. SO LET THE BOND HOLDERS ALSO TAKE A HAIR CUT IN THE RESCUE.. BONDS HAVE BEEN WORTHLESS BEFORE.. CHECK FRANCE'S HISTORY.. WHO PAID OFF THE LOSSES FROM FRENCH LOSING THE BATTLE IN RUSSIA???

For more details, please see Merkel’s Coalition Calls for EU ‘Orderly’ Defaults; Spain Prime Minister says Speculation of a Bailout for Spain is “Complete Madness”

It seems that Bundesbank President Axel Weber and German Chancellor Angela Merkel have figured out a little something that escapes the mind of ECB President Jean-Claude Trichet: ???Defending the Euro from defaults by Greece, Portugal, and Spain may be extremely expensive, ::)perhaps impossible.

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[scaredshirtless]

I'm back.

[itstippy]

I can't believe it, but Japan is still considered a viable Euro savior. International banking boggles my mind.

www.bloomberg.com/news/2011-01-26/kokusai-says-europe-rescue-debt-hot-as-asian-funds-follow-central-banks.html

[Aman A.K.A. Ahamburger]

B.. The FT has this to say..

www.ft.com/cms/s/0/48dae2e4-2c9d-11e0-83bd-00144feab49a.html?ftcamp=rss#axzz1CaKGChNd

Europe’s banking system is returning to health amid signs that financial institutions are no longer hoarding cash, according to key indicators.

Euro overnight bank lending rates have “normalised”, while banks have scaled back the amount of money held at the European Central Bank above reserve requirements – known as excess liquidity.

This has raised hopes that institutions are lending to each other again as fears of counterparty risk and a deepening of the eurozone debt crisis recede.

Is this what you have heard? IF this is true, good news for the Austrian banks. It's also a bullish indicator, isn't it??