This page has been archived and commenting is disabled.
Bernanke Is "Very Concerned" About Europe, Won't Bail Out European Banks
Just a headline for now, but the last time Bernanke was "very concerned" about something, the presses were already in motion.
- SENATOR HATCH SAYS BERNANKE `VERY CONCERNED' ABOUT EUROPE - BBG
And the kickers:
- BERNANKE TELLS SENATORS NO FED RESCUE OF EUROPE BANKS: GRAHAM - BBG
- BERNANKE `VERY CLEAR' FED HAS NO EUROPE BANK AID PLANS: CORKER - BBG
Unless, of course, he has no other choice...
»
- 16366 reads
- Printer-friendly version
- Send to friend
- advertisements -
Well, just put up a no-fly-zone in Europe and you get rid of those money-copters... and drones
still say it was fishy that qe was not even alluded to yesterday's announcement.
had to be a reason.
He's just now getting "very concerned"? That Bernankster, right on top of the situation.
> Digital Printing > Digital Presses Digital Presses Black and White Transaction Fast, reliable monochrome digital presses for transaction printing and publishing environments.
See a comparison of over 50 attributes on up to 3 selected Xerox products Compare features Compare features
4112/4127™ Enterprise Printing System Rated speed:
4112: 110 ppm
4127: 125 ppm
To be honest I don't think Benny has much room to print. People in America keep giving creditors promises that they won't duplicate any more dollars, and then they just go back on it.
Eventually the creditors (who also export to America all their stuff) are gonna say "fuck this shit." Benny must tread lightly.
Especially given the fact that almost all American post-90s military hardware is all compromised by Chinese semiconductors with hackable backdoors.
http://azizonomics.com/2011/12/14/americas-military-weakness/
Kill Gold... Check
Kill Oil... Check
Kill Middle Class... Check
OK Team Ben Shalom, Print Away!
"" * BERNANKE TELLS SENATORS NO FED RESCUE OF EUROPE BANKS: GRAHAM - BBG ""
Hey, why not???
We OWN Iraq, Afghanistan, why not own all the EURO BANKS also ???
Bernanke will sit on his thumbs. His policy dictates not to intervene in markets. The Federal Reserve has stayed out of the finance this long, they will not change policy and fund entities such as the European Banking system, that is certain.
"......won't bail out European Banks"
The independent Fed works in secrecy. These idiot senators won't even know when it happens.
He should be worried , when the last time Oil was down 5% and the SPX down 1%...1929, 1934, 1987, 2000, 2008...ect....whatever
Flash crash imminent.
Well a Flash Crash and maybe the Fed intervens; maybe.
Agreed. He's going to need serious cover fire in the US if he wants to socialize a big ole' European bailout. Will have to make it look like a US bailout(with the commensurate implicit guarantees) and swap the bejeezuz out of his balance sheet. I can't see it happening without a panic dump as a screen.
Coordinated action, bitchez
It pisses me off that an unelected individual is now going to arbitrarily dilute our currency in accordance with his econo-religious beliefs in order to "save" a foreign continent because our previously bailed out domestic banks have too much exposure to the sovereign debt of said foreign continent. Meanwhile they still charge average Americans $2.95 for withdrawing their own funds from a "non-Bank ATM."
Can someone please explain how we wouldn't have been better off letting these corrupt financial syndicates fail in 2008 like they should have?
I wish I could, but there is no explanation.
"we have to save the banker because if we dont they wont give us any more money"...
MarketWatch blogger...
just another example of why this country is doomed.....but hey, at least he answered ur question.....
Let's see at the end of this quarters financing report by BHO if he now has $1.2B so we'll know where the MFG money went.
It's not about us.
It's a big club and we ain't in it.
"........ unelected individual"
You seem to imply that "elected individuals" are working in our favor which they are sooooooooooooo not.
Maybe Bernanke can bail out the banks. I hear he's a multi-billionaire. Surely he'd be willing to put his money where his mouth is?!?!?!
-John
http://www.youtube.com/CarMarketer
+1 too funny...and sad...and unfortunately true! Oh and I want to thank MF Global for putting PMs on sale, heading down to the coin shop.
Not me, I'm selling mine and letting it all ride on JEF.
Booyah!
BOOYAH
Anyone else noticing more Emergency Broadcast System "Tests" lately?
Sounds like Bernank has been taking lessons from Noda.
Funny choice of words, Corzine was 'deeply concerned' about what happened with his company...
FLight to safety is the dollar.. I think gold is over done though - http://hedge.ly/shWwRh
The Bernank is very concerned as he threads the needle, watching money pour into negative real interest rate USTs, which is the only way the U.S. can service it's month to month, minimum monthly payment credit card like, essentially interest only debt installment payments.
In the short to medium term the dollar will be fine but we are in terrible shape as well, the comex is in trouble you could call it a fractional reserve system...get some physical sleep at night.
Is he 'watching closely'? nooooo ddaaaaaa
But didn't Obama urge the Eurocrats to take "decisive and forceful" action? Why worry?
***chuckle*** reminds me of this story about the Chicago Olympics....
Yea well, I'm very concerned about the Excrement Pile Bernank
http://vegasxau.blogspot.com
Today's 3:30 rumor could be a whopper!!!
memo said no rumor today
I heard a rumor there might be a rumor.
They say the rumor might be a tumor.
Place your bets* on the afternoon rumor of the day!
*Winners receive fiat money that is not be backed by any tangible assets
Screw the damn rumors, ANYONE that knows ANYTHING already understands how amazingly bullish this is!!!! /sarc off
Hatch is only concerned about his royalties on rap recordings and the wrap parties he gets invited to. In the temple.
CTRL P; Strong Dollar Policy; CTRL P; Strong Dollar Policy; CTRL P; Strong Dollar Policy
Tell a lie long enough and it becomes the truth.
-Joseph Goebbels
Yes, the irony is thick
And how well did that work out for Germany when the reality of Russian tanks showed up?
This was already said yesterday in the fomc minutes. Why spout bs rumors.
he was just on the hill
Yes, he was and they are telling him that his options are limited.
Europe will die if Bernanke is not allowed to print. That is why he is very concerned.
That is also why he really is printing.
Fuck Bernanke and the Hatch he rode in on.
Nice BB sound byte to flash crash on . I am "very concerned."
Fuck Bernanke!
Ah now we have senators spreading the 3 o'clock rumors.
rumors about what?
After they call their brokers...of course!
Thank God modern printing presses need no ink or paper, just electrons.
I am thinking to myself ... How was bankrupt Weimar Germany able to afford the ink and paper to print all those bundles of worthless cash?
The ink and the paper must have been worth more than the worthless print on it? Children were using the stacks as building blocks, women were firing their stoves with it.
Just at what point are paper and ink worth more than the value of the bill?
Damn, that's some observation!!! And the labor too!
"Just at what point are paper and ink worth more than the value of the bill?"
from memory, the old consensus was at 50'000% price inflation per year - 1'000% stopped robbers from lifting banknote transports - inbetween some get this strange compulsion of spending time writing zeros on a piece of paper
In the last days of the Weimar death spiral, they only printed on one side of the paper. 50% ink savings, and 50% engraving savings. Still burned just as good in the stove.
Sheer lunacy! All because THEIR world doesn't function without FIAT.
How do you burn 0s and 1s?
I dunno, maybe that's why Large Hadron Collider was built.
Thats easy. They buy more inks/papers and ladors with worthless papers, circuraly.
They printed some money, then thought: "shit, we can't afford the ink and paper now"
So, they printed some more.
Tell you what, this printing money lark is a bitch of a vicious circle.
heard there's a bill proposing the taxing of electrons on the horizon.
they've run out of things that they can visually see to tax - so it's the next logical step.
and i hear tell there are lots and lots of electrons.
So THAT'S why copper dropped....
And, here, I thought they were going to vote on rounding everyone up that's on sites like this, and CTRL-P to infinity to fight inflation....
Matters not. Even electrons don't move fast enough to save this thing. See you on the other side.
somewhere in the basement (or penthouse?) of the FED there is a real live person sitting at a keyboard typing our money into existence.
remember three weeks ago when (one of the) Tylers noted the big drop in bank reserves and corresponding big increase in the FED's 'other' liabilities.
while there may have been momentary benefits to the possessor of the asset side of the 'other liabilities' by the next week the Fed's Big Typist typed down 'other' liabilties and typed up the Treasury's checking account at the FED.
last week, the Treasury wrote checks on its account which the FED's Big Typist covered by typing bank reserves back up.
So perhaps the 'other' liabilities thing was just a misdirection to cover the FED's current form of monetization.
It is no longer at the FED, the job has been outsourced to India.
lol
theory duly modified
you are the son of Gutenberg I believe...? Yes, the world has changed since the days of your father.
He's worried because he doesn't know wtf to do.
Is there something wrong with Europe?
I am there, a bit windy here in Europe, but nothing wrong! Bernanke must suffer from hallucinations.
It's a bit chilly in London but then it's that time of year.
my spidey sense has been off the charts today. something big is happening, they may keep a lid on it til after consumermas though. the rehypothecation breakdown is beginning, MF global may have been the spark. my gold is looking extra shiny today, even though the spot prices are collapsing. hmmm.....
Price action in the issues I follow is odd today no doubt. I think end of year rebalancing must be going on full force.
UR UP!
if hes worried then he obviously hasnt stocked up on canned goods and medicine, fortified his walls, acquired small calibre weapons and alternate sources of energy.....he really shouldve paid more attention to zh............
PAY NO ATTENTION TO THE MAN BEHIND THE CURTAIN....
Ben is clueless...just let it go and seek it's fair value dumbass
That's not his job. In fact that is the antithesis of his job description.
HBO SPECIAL TBTF part II?
Gold slam before QE announcement?
Ha! People who know what's actually going on are very concerned about Bernanke.
No problem: Let's just get the S&P downgrades done, let Greece default, and then start up the printing presses. Problem solved. /sarc.
Seriously, I think thats the plan. But not before a few good days of market tanking to force some selling.
Whenver politicans get involved, you can bet its a test balloon. I should know, I watched every episode of the West Wing.
Conclusion ... QE3 ... Bernanke learned his lesson with Lehman, he's getting set to throw Europe a big ass life line
George ... The Greek ... From Canada
ZERO HEDGE SAYS EVERYONE SHOULD BE `VERY CONCERNED' ABOUT BERNANKE - PT
Considerably less scary than the real thing, but you tried.
I was shooting for stupid looking. ;-)
he will ride off on his balloon and leave us stranded
we dropped the house on the wrong person
just follow the yellow brick road
Technically - it's "The great and powerful" Wizard of Ponz. Says so on his business cards, parking space at Goldman and on a heart shaped tattoo on Jamie Dimon's ass.
lmfao! The punky smug expresson and inversed eyes... oh shit that's awesome!
ZH always the best info great writing and without a doubt the funniest damn shit anywhere.
I think this actually happened.
http://www.theonion.com/articles/drunken-ben-bernanke-tells-everyone-at-neighborhoo,21059/
Is Sen. Hatch credible? What are the open positionbs on his Schwab account right now?
Not positioned as well as Nancy Pelosi.
Are you asking if a Mormon who writes Chanukkah songs is credible?
http://www.youtube.com/watch?v=TTIj-0-KFR0
Pencil pushers in Big Bens office are probably at wits end at this point.
Big button push soon cometh. Before or after the downgrades that is the question.
Why? Does Ben buy his ink from Europe?
Just print already u keynsian bitch
Looks like this will be the last time they'll be able to suckerpunch PM's.
Going by his previous vastly underestimated comments about dire problems, that 'very concerned' really means scared sh!tless!
Uh oh.
Massive rally coming? These official pronouncements of doom usually lead to big rallies.
One has to wonder why he didn't hit the door when he had the chance. He had to have known round two was coming.
Bernanke has a chip on his shoulder against the Zero hedge mantra : Fiats are shit, physical PM's to infinity as "naked" hedge. He will do everything in his power to be servant of the current disease of Capitalism : The Goldman Sachs Disease.... Worse than financial Aids. No "zero" hedges in his catechism; always covered by the buddy-buddy network of uber-crony capitalism. The stuff that legends are made off... Long live the Heretic who destroys the myth and reveals the truth about 'The man who shot Liberty Valance'.
The funny thing is they can't do a damn thing about the reality of the collapsing shadow banking funding that was used in leveraging up the system.
The very existence of the fed is coming into question and so it makes sense that NDAA has the provision of treating any US citizen as a terrorist based on 'trust me' suspicion because it will soon be considered terrorism to expose the flawed financial system for what it is. The genocide has just kicked into another gear.
Desperate and very too little too late.
No bailout for IMF
Because Hatch doesn't have brains enough to be concerned on his own? lulz
i can see it now - hatch and ben at a 'stop-loss' [fill in the appropriate,'clause'] rally for the vet's -
these pathetic dual scum[air]bags!
I know there's a lot of sharp people on this site. Can anyone explain to me how the market is down 160 and FAZ is only up .43 cents?? thx
Financials aren't down as much as the DOW.
not sure, but you know FAZ is financial short. JP Morgan and wells fargo are actually in the green, other financials in the red, maybe it evens out. also the slow creep down is not so good for the ultra shorts as dramatic movements.
It finally just popped a bit. Had been under 43 all day and just jumped to 43.25.
Dude, FAZ doesn't track "the market" it tracks the financial sector. Check it against XLF, looks spot on to me XLF -.5%, FAZ +1.5% .
P.S. I wouldn't trade FAZ because when the SHTF it will probably fail, IMHO.
I know it's a financial short but most financials have been down as well. I have no doubt it will fail. Short term play. Thx for the info!!
Markets allow for price discovery.
There are no more markets. Only central planning. Thus, no price discovery.
Excuse me.........
BULLSHIT
How come he did before?
He just lying.. He is giving a message to the market, telling them to sell aggressively so that congress can ask him to do something and he will do the QE3 , otherwise it will look like a political move. That's the reason he didn't announce QE3 in yesterdays meeting.
Is it true? Every central bank for themselves?
I'm sorry, that was a stupid comment. It'll never happen again. I promise...Well, as much as the bernanke does.
These policy makers don't understand one important thing.
We The People don't want a depression but we realize that there has been so much corruption and so much malinvestment that we understand the need to have one to right the ship.
If we took the course that Iceland took we would already be on the way to a stable economy. But no, we can't have that. We have to obfuscate the truth, promote malinvestment, and have the financial losses of the largest companies be socialized to the public. Three years later we are once again perilously close to falling back into the abyss.
We need default and we need the system to cleanse this wretched behavior.
Federal Reserve Chairman Ben S. Bernanke signaled he’s concerned Europe’s crisis will hobble a 2 1/2-year U.S. expansion that may need another boost from the central bank.
The Fed’s policy-setting panel, which met in Washington yesterday, said the economy “has been expanding moderately,” compared with the Nov. 2 assessment that growth “strengthened somewhat.” At the same time, the central bank added a reference to “apparent slowing in global growth,” and said that “strains in global financial markets continue to pose significant downside risks to the economic outlook.”
Bernanke and his colleagues may be considering more measures to aid growth and improve public understanding of Fed policy, which could be unveiled as soon as their next meeting taking place Jan. 25-26, said Julia Coronado, chief North America economist at BNP Paribas. The Fed reiterated that it expects joblessness to drop “only gradually.”
“They still see downside risks, so I still think they’re tilted toward easing,” said Coronado, a former Fed researcher who is based in New York. She said she expects a new round of asset purchases in the second quarter, or as soon as the January or March meetings should the economy deteriorate faster.
The “recent strength in data” allows Fed officials to “be a little more patient than they otherwise might be,” Coronado said.
Consumer ConfidenceImprovement in some U.S. statistics suggests growth may be accelerating. The index of leading economic indicators rose 0.9 percent in October, the most since February. A consumer confidence index from the Conference Board rose in November to the highest since July. Manufacturing expanded in November at the fastest pace in five months, according to the Institute for Supply Management’s factory index.
The Federal Open Market Committee, in its statement yesterday after a one-day meeting, reiterated that interest rates would stay near zero through at least mid-2013 and maintained its $400 billion portfolio shift toward longer-term Treasuries, the September action dubbed Operation Twist. Chicago Fed President Charles Evans dissented for the second straight meeting, preferring additional easing.
Policy makers acknowledged “some improvement in overall labor market conditions” after the unemployment rate unexpectedly fell by 0.4 percentage point in November to 8.6 percent. That level is still “elevated,” while business fixed investment “appears to be increasing less rapidly” and the housing market “remains depressed,” the FOMC said.
Dollar StrengthensStocks fell, Treasuries gained and the dollar strengthened against the euro as the Fed dashed some investors’ expectations for additional easing yesterday. The Standard & Poor’s 500 Index dropped 0.9 percent to 1,225.73. Yields on 10-year U.S. government bonds declined to 1.97 percent from 2.01 percent, while the dollar rose 1.1 percent to $1.3037 per euro.
Bernanke, at the prior FOMC meeting Nov. 1-2, asked a subcommittee on communications to consider a statement about the Fed’s longer-run goals and strategy, minutes of the gathering showed. The subcommittee is also examining how to include FOMC policy makers’ own expectations for monetary policy along with their forecasts of the economy.
“They probably hammered out the final details” yesterday of a communications overhaul to be unveiled at the January meeting, Coronado said. Officials will probably publish their forecasts for the federal funds rate and specify circumstances in the labor market and U.S. growth that would warrant tighter monetary policy, she said.
Two-Day MeetingBernanke, who turned 58 yesterday, give his next press scheduled press conference Jan. 26, following a two-day FOMC meeting.
Keith Hembre, chief economist and investment strategist at Nuveen Asset Management, said he is forecasting a slowdown in growth next year that makes a third round of bond-buying a “distinct possibility.”
Right now, “it’s probably premature to be pushing even further for more accommodation, given that you could make a case that there’s been some response by the economy to the steps that have been taken,” said Hembre, whose company is based in Minneapolis and oversees about $207 billion.
Fed officials may be betting that they won’t need to ease further should their foreign-currency swap lines providing cheap loans to overseas banks help alleviate the crisis in Europe, said Hembre, a former Fed researcher.
Three-month loans to the European Central Bank from the Fed surged last week to $50.7 billion from $400 million after the Fed, ECB and four other central banks lowered borrowing costs by a half-percentage point in a coordinated action.
Inclined to EaseEurope’s turmoil and the rotation onto the FOMC next month of policy makers who may be more inclined to ease make the odds of a third round of asset purchases before July more than 50 percent, said Tom Luster, a portfolio manager at Eaton Vance Corp. in Boston.
“It would seem to me that at a minimum you have a pretty significant recession in Europe, which is likely to affect us directly,” said Luster, who oversees $6.2 billion as director of investment-grade fixed income.
Philadelphia Fed President Charles Plosser, Dallas Fed President Richard Fisher and Narayana Kocherlakota of the Minneapolis Fed, who all dissented from the August and September decisions to ease policy, don’t have FOMC votes next year, along with Evans.
In their place will be Cleveland Fed President Sandra Pianalto, Atlanta’s Dennis Lockhart, San Francisco’s John Williams and Jeffrey Lacker of the Richmond Fed. Lacker is the only official with a history of dissents. Williams is voting for the first time.
Tad Rivelle, who oversees about $67 billion as head of fixed-income investments at Los Angeles-based TCW Group Inc., put it this way: “Does the U.S. economy have enough momentum to keep stumbling forward, or will the problems from across the pond restrain us?” he said on Bloomberg Radio’s “The Hays Advantage” with Kathleen Hays.
To contact the reporters on this story: Scott Lanman in Washington at slanman@bloomberg.net; Joshua Zumbrun in Washington at jzumbrun@bloomberg.net.
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
time to guarantee all derivatives...
Is Ben on crack? We don't have a whole fucking 42 DAYS!!!!! HE NEEDS TO PRINT NOW!!!! The Ponzi is falling apart! Santa is NOT coming! Think about the children! What about the children????
Ummm..., that time was 2008. Now the guarantees are being carried out (as will the bodies...).
shorts are just getting their confidence back.
That means it's about time some story comes out like Italy and Greece have made a deal with GRPN to buy back all of their debt at 90% off and have already just sold it back to the markets at par.
thanks for the info orrin hatch, you traitorous piece of shit...........
If they announced Greece was preparing for BK, I'm VERY CONCERNED there would be a bank holiday and markets closed a few days.
Just print damn it.
Jim Cramer has personally told me that this is very bullish for equities.
Translation....
US banks bailout Europe>>>>Bernanke bails out US banks.
As the bailout to Europe won't be direct the truth is a victim of misinformation
XLF is down only .04...the banks have been signaled.
Ben has to be fed up with these idiots in congress. He has repeatedly told them they need to get their shit in order or the long run potential growth rate for the us economy will ratchet lower (I.e. Lower standard of living, I.e. Chaos and social unrest). The clowns respond with a super committee and a dead line that ends with a huge whimper. Just all around failure. The ai in simcity could run things better than these so call leaders.
Time to debase fiat money in 3...2...1...
But Bernanke is talking about more QE because of Europe.So even if no explicit bailout, there is an implicit bailout.
My House Oversight Testimony on The Eurocrisis, The Fed And Implications for Taxpayershttp://confoundedinterest.wordpress.com
No matter how hard you try, I'm still not reading it.
Bernake swap put eroding. Beginning to feel a lot like 08......not Christmas.
BTFD in PM, comrades.
Ummm. They already did. That is what the swap lines are. Plus whatever other free loans we are hiding.
There is the tell...he isn't going to bail out the European BANKS.
Now if he sends some money to the IMF or ECB and they just HAPPEN to give some to the banks...oh well.
he said or maybe it was Fisher, that helping the ECB was not helping the European banks, so its a game of semantics, he's already clear on that. he will help the ECB. and was Corzine really buying sovereign debt for himself or what? read somewhere that the EU has made it clear they will not print money until AFTER the debt solution, but that's more semantics too. they print either way.
I am also very concerned. Waiting for the collapse kills me, please bring it on and let my euro shorts dance.
the fed is not going to bail out the EU...
isn't that overstating the obvious?
the US is massively in debt, deeper than even the EU I believe.
maybe what he should have said was "sorry but we can't afford to bail out the EU, not without printing the dollar into oblivion in the attempt." instead he makes this statement as if it was his choice, in an attempted to project an air of control and confidence, as if he is in control of the situation.
the only thing Bernanke and the FED have left in their arsenal is the world killing nuclear print button. but how long before, in his twisted little mind the scorched earth policy becomes the only option left?
Hasn't this happened before, somewhere in history?
US stays out of European problems
European problems get worse
Suddenly, US gets side swiped by the Asians
US suddenly bails out Europeans
US wins in the end.
Throughout all this, the UK stands alone.
The most telling headline is from what ZH tweeted earlier:
And there you have it, the central planners want to scare any EU skeptic into falling prey to their 'solution' and thus further consolidating their powers.
Spy being propped up as usual... What a joke! Why no QE announcement? Why no perp walks by the big players at GS, JPM, etc. in the financial crisis? Because Bernanke knows his pals on all the prop trading desks at the primary dealers will shotgun the ES and SPY whenever it's about to break major support. Comedy. Fake, fake, market.
Why are gop senators rushing to the podium to make strange statements? I can smell soiled garments from here. Something is definitely going down.
“[Y]esterday, Fed Chair Bernanke announced that The Fed stands ready to provide further easing based on Eurozone risk. Since The Fed can’t really push down rates much further, The Fed must be contemplating expanding The Fed’s balance sheet to provide additional liquidity and marginally lowering interest rates. Retirees and people living on fixed incomes will be further harmed by The Fed’s reaction to the Eurocrisis.”
– Testimony to be given tomorrow to the United States House Committee on Oversight and Government Reform Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs by Professor Anthony B. Sanders (Distinguished Professor of Real Estate Finance, George Mason University and Senior Scholar, Mercatus Center at George Mason University) and previous Director of asset-backed and mortgage-backed securities research at Deutsche Bank and the co-author of “Securitization” (along with Andrew Davidson) as well as many economic and finance publications.
http://confoundedinterest.wordpress.com/2011/12/14/my-house-oversight-testimony-on-the-eurocrisis-the-fed-and-implications-for-taxpayers/
Of course he won't have to bail out Europe directly...Just the US banks when the European defaults bring them down...
"BERNANKE TELLS SENATORS NO FED RESCUE OF EUROPE BANKS: GRAHAM - BBG"
I think a more appropriate headline would be-"Bernanke Tells Senators No Second Rescue of European Banks" Its (now) a well know fact that in the midst of the 2008 housing/derivative debacle the Fed poured 3 TRILLION dollars into European banks. All backed by the good faith and credit of the United States (read the US Taxpayer). I would hazard to say if the Fed tries to bail out ANY bank again, European or US, their will be blood in the streets.
More testimony to come tomorrow from Dr. Anthony Sanders before the House committee:
“The Fed has been active in the Eurozone bailout starting in 2007 with its Discount Window operations (see Figure 7) that peaked in 2008. The largest Eurozone borrower from The Fed was the failed Belgian bank Dexia. While most of the discount window loans have been repaid, we are still in the dark on the guarantees.
“Recently, the ECB drew $552 million from The Fed’s Dollar Swap Line in the last week of November. These are seven-day dollar swaps at an interest rate of 1.08%. The central bank also borrowed the same amount in an eight-day swap arrangement in the prior week. It begs the question ‘How long will The Fed keep their swap line open?’ While we cannot see the swap line in real time, the evidence indicates that the basis swap approach has a very short half-life (see Figure 8). The one year basis swap shows the same temporary impact (see Figure 9).
“A recent disagreement about the size of The Fed’s intervention (discount window and guarantees) was in the media between The Fed and Bloomberg Markets Magazine. The Bloomberg article said the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system when all guarantees and lending limits were added up. The Fed disagreed and stated that on any given day, Fed credit from its emergency liquidity programs was never more than about $1.5 trillion. Whether we are looking at ‘any given day’ or the cumulative impact, these are very large numbers indicating that The Fed is attempting a bailout of the Eurozone…
“On The Fed side, it is clear that guarantees to the Eurozone could be problematic to U.S. taxpayers. And the swaps with Europe could be costly as well…”