A Complete Guide to European Bail-Out FacilitiesVeröffentlicht: 4. September 2013 | Autor: Oeconomicus | Abgelegt unter: Emergency Liquidity Assistance (ELA), EZB, Long term refinancing operations (LTRO), Main refinancing operations (MRO), Outright Monetary Transactions (OMT), Securities Markets Program (SMP) | Tags: asset valuations, Bail-Out Facilities, credit rating, ECB balance sheet, ELA, intervention, LTRO, Main refinancing operations (MRO), OMT, Securities Markets Program (SMP), SWAP line, Target, tender procedures | Hinterlasse einen Kommentar
Part 1: ECB
Over the last couple of years we have been tracking the various bail-out schemes concocted by ingenious Eurocrats. It is truly fascinating to observe these people get entangled in one lie after another; always trying to resolve the old lie with a new one. The hard cold truth is of course that Europe is bankrupt! They cannot repay what they owe and they cannot maintain a level of consumption that for most are far higher than production. A deep-seated fundamental restructuring is long over-due, but the Eurocrats have an uncanny ability to kick the proverbial can. Our main concern today is what they will do when they run out of road. But that is a discussion for another time.
The road of course ends when there is no more real capital to leverage. We see signs of this already! In the meantime, every time our Eurocrats need to circumvent self-imposed rules or see the same signs as we do, a new destructive program, or bazooka, is launched to save Europe.
We will take you through all of these schemes in order to make a small, but important, contribution to educate our readers about the utter destructiveness the European elite is prepared to go through in order to maintain status quo!
We will try to keep a chronological order, but often it will be impossible as these arrangements run in parallel or have become too intertwined to really be easily separated. Some plans are just that, deliberate plans while others stem from poor designs in the euro-system that ended up as far larger bail-outs than the ones contrived by Eurocrats.
Before we start our exercise in European folly it is important for the reader to understand certain concepts crucial to modern economies.
First of all, the ultimate measure all tend look to when assessing the overall health of an economic system, namely gross domestic production (GDP) does not measure production at all. It measures the broadest level of monetary inflation possible. It takes into account the monetary base as given by the central bank and on top of that total commercial banking leverage. In addition, it account for overall velocity. GDP thus measure the level of excess the government can allow itself. It measures the relative debt share and it measures the amount of deficits any given government can maintain through inflation.
Secondly, as implied by our GDP discussion, it also provides a direct link between overall banking leverage and “growth”. In other words, unless the banking system is healthy enough to maintain a constant level of credit inflation GDP growth will come to a halt. It is imperative for the government to make sure the banking system is free to inflate because they will both rise and fall together. Any bail out of states is bail out of banks; any bail out of banks is bail out of states. Realize this, and everything else falls into place. Den Rest des Beitrags lesen »