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The FED announces currency swaps with all major Banks following the announcement of ECB package
As I have said before in the comment section under numerous articles in the past month or so, Federal Reserve Bank decided that the surge in the dollar exchange against other currencies, but most importantly the Euro, can not sustain FEDs long term plans concerning the recovery of the US economy. In a statement issued late this night FED announced re-opening of swap facilities which will take the strain off the USD. Full statement can be read beneath.
Release Date: May 9, 2010
For release at 9:15 p.m. EDT
In response to the re-emergence of strains in U.S. dollar short-term funding markets in Europe, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing the re-establishment of temporary U.S. dollar liquidity swap facilities. These facilities are designed to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers. The Bank of Japan will be considering similar measures soon. Central banks will continue to work together closely as needed to address pressures in funding markets.
Federal Reserve Actions
The Federal Open Market Committee has authorized temporary reciprocal currency arrangements (swap lines) with the Bank of Canada, the Bank of England, the European Central Bank (ECB), and the Swiss National Bank. The arrangements with the Bank of England, the ECB, and the Swiss National Bank will provide these central banks with the capacity to conduct tenders of U.S. dollars in their local markets at fixed rates for full allotment, similar to arrangements that had been in place previously. The arrangement with the Bank of Canada would support drawings of up to $30 billion, as was the case previously.
These swap arrangements have been authorized through January 2011. Further details on these arrangements will be available shortly.
Trade accordingly or do not trade at all; your choice, but the madness we have witnessed in the FX market shortly after the EMU members announced a 720 billion euros rescue package, and basically broke their own law by announcing sovereign bond buybacks in the secondary market and thus insured a massive QE program, will be repeated not on a daily basis, not on an hourly basis but on a tick basis.
Well I can not say that this was unexpected but what does surprises me how short of a time [an hour or so] took the FED to announce the re-opening of swap facilities and how apparently well coordinated was the effort among the Banks. Expect equity futures to trade significantly higher and for the DOW to brake 12k in a week or so.
Apparently when nothing else is left hyperinflation is left since nothing else matters except constant 10 second up ticks on all major global equity indexes every day, every year until time itself can not, for much longer, endure the constant rise in the equities.
Enjoy what is left of your purchasing power and do not forget to load up on gold.
UPDATE: Here is a chart of USD/EUR FX. Note the significant fall in the exchange value shortly after the EMU announced the size of the bailout package. Now note the upswing beginning at around 00:50 BEFORE the announcement of the re-opening swap facilities became available. There are two choices why we see these kinds of movements: a) The FED leaks information to viable parties who then use said information to basically do what amounts to FX insider trading b) the FED moves via off shore fully FED funded FX fund and influences the FX markets for its own benefit. Judge for yourself.
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Swapping spit again; this orgy is gross.
What happened to Iceland. The last I heard they voted to not bailout the banks/bankers. Any repercussions?
No. After they fired up the volcano the amount of collection agents sent to collect the debt diminished rapidly. Weird huh.
They must have a gold confiscation plan to shore up the house of cards
bingo
http://fofoa.blogspot.com/2010/05/open-letter-to-emu-heads-of-state.html
Jim Sinclair was right all along... the PIIGS will be bailed out..
more printed fiat money.... no Real Gold bars on the table..
I would bet the Federal Reserve put up 80% of the funds...
Helicopter Ben again... The Euro and US Dollar is Toast..
maybe not this week but soon...
Cheeky,
Nice to see your return to the contributor space. I love your no nonsense style. Be well my friend.
I would vote for a big Ben B wink to Goldman S@cks.
cheeky bastard, would love to scream your name at the top of my peak.
did you spare your mom yesterday?
jealous of your speed dials, or rather your automobile collection†
Right about now the Saudis the Russians and the Chinese are thinking they have all been had. What are they going to do about it? That is the question. The answer is the problem...or soon will be.
.
They are doing what we are doing--grabbing assets, moving long term savings to real assets and gold, and wondering how the hell to buy a sandwich in five years (i.e. with what currency).
Watch for the inflation to get vrry vrry serious in oil soon. Remember, the Saudi price band was $22-27 per barrel quite recently. Devaluation has occurred already, more is coming. Having tested $150/barrel last time, next time assume it doubles. People are never ready for the realities in commodity markets. Remember $1.20/mmbtu natural gas? Remember $13/mmbtu? They both happened in the past 10-15 years. $9/barrel oil?
Oil $300, Dow/Gold 1:1 at around 3,000-5,000....nobody gets it even on this site, OK maybe 1 in 10 do. I am not a 'bunkerz, bitches' type I live in society and all of that, but how it will play without a total collapse is hard to fathom. Total collapse is a more popular theory in part because it is easier to think about.
That is why I am buying my "sandwiches" now. Hard to stockpile natural gas and gasoline, easy to stockpile food.
Here's the email to send to friends and family.
Dear Sir/Madamn:
Please cash all your money out of all your 401ks and bank accounts and go to gold and silver. I will shoot you if you try to ask for "real" money.
Do not fuck with global carry trade. It won't end well.
well, inflation is the friend of governments and the wealthy and deflation the friend of the poor. What a big surprise!
Silver...Gold...to buy what? Chinese TV's? The electric or water bill? Gas for the car to get to the job you don't have anymore? Hard assets will be canned food if any of the predictions come to pass. And, you had better have some spare change to give to the police and firemen's fund.
I am so amused at some on ZH who STILL write about capturing some game to get a little more in the bank before the music stops instead of protection the assets from losses.
What most here on ZH can plainly see and understand, gets hijacked by the Fed and makes our hand wringing look foolish and without basis to any ear we might have had a second ago. Most of us are witnessing what other will not realize for months, we forget the the media is owned by interested parties.
I had friends over this weekend who were JUST picking up on the Greek story. I had nothing to say, why bother.
I try very hard to step back so far that the noise does not reach my ears so that I can see the big picture. At 63, I don't like what I see and civics and real history is not taught in the schools now. Seems that it skips a generation or so and then reappears, it is called slavery. And this one will be by corporation interests who are and have become governments. All you civil servants are about to face what 'work smarter' has come to mean in the business world...do twice as much for half the pay. The new Blacklists will be a reason to stay clear, less the same fate be yours. Oh, and there is much more, but why bother when my peers don't wnat to know, and generation X,Y, and Z still plaster "NO FEAR" stickers on their bumpers. Just remember...war has always been the answer for man's ills, and all the nasty ones have roots in this part of the world. It's all a matter of blindfaith.
Hey, blindfaith, I don't see much to argue with -- and much to agree with. The reason your friends just found out about Greece is that the MSM covered the riots -- only. The "why" was financial but MSM didn't cover that much. Your thoughts on precious metals is to skip them and go straight for the hard goods (guns, grub, and gardens)? You have 2 years on me, I'm 61. I still see having some junk silver at least as a good idea.
"Unbelievable"??
I said that this was going to happen several weeks ago. In response to the apocalypse talk around here.
Look, they can stave off the balance sheet insolvency forever with fake money and QE. They cannot dictate how much the paper money is WORTH in real terms.
The answer to deflation is the same thing I told Douchinger: just print. Printing SOLVES the accounting ledger issues. It does NOT solve the underlying economic problems that CAUSED the accounting ledger issues.
printing does solve the underlying economic problems....wipes out debts, jubilee...ask Zimbabwe they owe nothing to foreigners....but wiping out debt is not what the want to do....one person's/country's debt is another persons savings...
I keep hearing folks talk about the new war front is cyber war....I think we will have cyber and physical wars break due to coming money wars, no way all the crooks will agree on how to divvy up the loot and it gets messier when all the crooks have to decide how much to spend on bribes to whom to stay out of jail..
Lowering my long term equity projections to zero or near zero baseon Fed/ECB actions. Near term bullish as Cheeky says however.
I agree with TD in that we will shortly see weakness extend to the "core" countries that are pretending to provide "bi-lateral" loans, ie Germany, France, and ultimately the US via IMF and bailout proxy known as swaps. German, French, US, and UK debt should start to materially weaken in the next few months, if not sooner, as they attempt to swallow every bit of bad bank debt out there.
More importantly, one should not be surprised to see a war break out in Europe in the next 6 months as the ECB attempts to run various countries with opposing interests.
The end game is finally near.
Here's a fun scenario: Germany says FU to EU, topples 'responsible' government and installs 'terrorist' government that won't give German citizens' money to French banks and Greek hairdressers.
EU-ECB cobbles together intervention force with French, Italian, Danish, Polish and Spanish firepower, gets ass kicked in about 36 hours. Only bright spot, the aerial ballet wherein the Swedes fly rings around the Luftwaffe with their Saab fighters. Alas, the Swedes join the Deutschemark Allianz in a double cross intended to appease death metal fans in both Sweden and Germany.
I could go on...maybe another CB thread to play out the security implications of complete chaos in Europe following a failure of nerve and triumph of corruption--er, I mean "Defense Of The Euro"....
Bailout, in brief: "Something must be done. This is something, therefore we must do it."
Your syllogistic logic: impeccable!
HA!! love the pithy-ness.
Cheeky
Just one question, how long does this shell game last?
Six weeks or so (approxiamately when the Club Med countries figure out that they are still on the hook for austerity?) or the 1st epic fail at the (soon to be hourly) Treasury auction?
Just wondering.
This so-called liquidity facility reminds me of a river a mile wide but only 1 inch deep.
All this drama is makin' me thirsty.
That, and these pretzels.
Test screenings of the original picture didn't play well...especially with management.
So now, in a desperate hope that life will imitate art, they're rushing out Humpty Dumpty II onto CNBC screens all over the world - even though everyone knows there is no sequel.
Is this not the equivalent of a sovereign "liar loan" by both the ECB and the Fed?
So, how was that parachute drop, DB? You been investing the whole $200K in stocks, or did you blow a little in Tijuana first?
Well played, DB.
What you gain on the roundabout, you lose on the swings.
BERNANKE'S COFFIN:
http://williambanzai7.blogspot.com/2010/05/dr-bernankes-coffin.html
EURO RESCUE:
http://williambanzai7.blogspot.com/2010/05/euro-rescue-2010.html
Get your William Banzai Eurozone Bailout shirt at the ZH Fundraiser store:
http://www.zazzle.com/eurozone_bailout_by_william_banzai_tshirt-235176222894021684
Been watching the bankster bailout all day. Knew it was going to be a co-ordinated, desperate push when Tokyo bought it.
We'll see how long they can keep it up - before it occurs to someone somewhere that someone is going to foot the bill for all this. :-) The US? (Which means, indirectly, China?)
I'm just waiting for the first piece of 'bad news' - probably in the bond market - before the REAL crash happens. (Unless some of those wild & crazy europeans topple a corrupt government.)
I'm taking small trips up on the bankster bounce in the meantime...building up the account in tiny dribs and drabs while waiting for the big one to hit, VERY quick buys. I think they are shooting for 1.32, which was the beginning of the Big Slide. That will restore the bankster losses and, they hope, faith in the markets. London's letting it slide a little now, just so that New York has room to push it up further.
('See? It fell down but we put it all back! Buy and hold, babycakes. All the kings horses and all the kings men are on the case.')
I don't hold out much hope for this week, though. I have to keep wiping my mouth anticipating shorting this pig all the way back down...in a day or two? a week?...how much time does a near $1T bailout buy these days?
"Judge for yourself."
The answer is a 3-letter-word: J-P-M!
This is not "inside", this is incest. However, in their world, incest is allowed.
altar boy, Mr. Morgan?
Mr. Morgan is the official tapeworm of the Fed.
the Fed is the official H1N1 of the american economy
(courtesy of AA from yesterday - virus of the mind)
http://www.youtube.com/watch?v=suNzxthcTJs
time to cleanse?
I've uploaded a DOW chart.
http://www.zerohedge.com/forum/latest-market-outlook-0
http://stockmarket618.wordpress.com
price discovery
extended correction
exhilarating process
verbal warning
fates calling
winter here
After I had finally figured out that the (stock) markets are only supposed to go up, I came across this quote from Gary Dorsch (http://www.marketoracle.co.uk/Article18271.html) Imagine for just a moment, that the Dow Jones Industrials has become a key instrument of national economic policy, and that by “actively managing” its direction, the government could impact the wealth of tens of millions of US households, and by extension, influence consumer confidence and spending. By ramping up the growth of the money supply, and slashing interest rates to zero percent, in order to inflate market bubbles, the Fed could in theory, fuel an economic rebound. It looks like it will be policy for everyone to have an economic rebound.
That does seem to be the plan. Most consumers are not buying it.
The key phrase here is "in theory". Yes the FED's unmitigated hubris. An extension of the goal to maximize bank profits. FED theory is not focused on helping the US taxpayer.
Several points in looking just below the surface of the statement made.
An analysis I find myself doing for much of what is presented in economic discussion. Much of the logic is not based on actual data, many times the ideas do not track the facts, or when compared with data, are ambiguous. The implications require a lot of backing data in order to be believed.
The equity wealth is only paper net worth, due to the costs of conversion relative to the real value in equity. You must first find a buyer in order to realize a gain (conversion to currency). The presence of buyers is what will dictate profit, not what is recorded on your balance sheet. If buyers are scarce, you may not have any profits. Equities are not liquid and cannot influence spending unless converted.
You can only influence spending if there is available descretionary funds at the house hold level. We are in a period of debt de-leveraging. Budgets are very tight.
An economic rebound is only possible through aiding the private sector in its use and supply of capital. Growth through manipulation of markets is not growth. It is an attempt to delay a recognition of loss.
The word rebound is also suspect, because this implies a certain amount of normalcy from the starting point of the economic downturn. But, returning to 2006 as per policy, is fundementally flawed.
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We can recover, but only if we understand the source of our costs relative to available investment capital. To try and paper over (QE), during a debt de-leverage cycle through the purchase of bad debt given the current realities in US fiscal policy, is blantently irresponsible, and will not "fuel" anything in the long run.
Mark Beck
It might be policy, but it is not reality. By Monetizing debt, all the Western Leaders are effectively weakening their currencies and economies. In essence, they are becoming vulnerable. One of the EU leaders is posturing and shouting that speculators will not take down the Euro. I think he means, they can do a very good job of bringing it down themselves if we are just patient. And, when they have finally weakened their own economies enough then in the infamous words of our buddy, Gecko:
Bud Fox: Why do you need to wreck this company (COUNTRY?)?
Gordon Gekko: Because it's WRECKABLE, all right? I took another look at it and I changed my mind!
I wonder if Chinese Financial Policy makers watch this movie daily?
There go my euro bank shorts!!
Worth remembering that this bailout is less than TARP and is going to be structured as acces to low cost credit (if im correct) so wont be re-leveraged. Two week surge and a great time to get out of any lingering long positions i believe.
Sorry CB but i dont have much to add on the swap lines, except USD retraces some of its surge in the near term before everyone piles onboard to get out of any and every european position imaginable.
gotta cover some of those shorts on days like last thurs/fri.