1-Mar-12 WV-'Euro crisis is over' after €1 trillion QE

[John]

1-Mar-12 World View -- ECB: 'Euro crisis is over' after €1 trillion quantitative easing

Syrian regime begins ground invasion of civilian neighborhoods in Homs

** 1-Mar-12 World View -- ECB: 'Euro crisis is over' after €1 trillion quantitative easing
** http://www.generationaldynamics.com/cgi ... 01#e120301



Contents:
Syrian regime begins ground invasion of civilian neighborhoods in Homs
North Korea says it will suspend nuclear activities for food
Egypt lifts travel ban on detained Americans
India reverses position and backs Arab League on Syria
Hamas officially breaks with Syria
Wikileaks: Russia and Israel exchanged Iran's/Georgia's secret codes
ECB: 'Euro crisis is over' after €1 trillion quantitative easing
Judge rules that cigarette warnings violate First Amendment


Keys:
Generational Dynamics, Syria, Baba Amr, Homs, Bashar al-Assad,
North Korea, Kim Jong-il, Kim Jong-un, Hillary Clinton,
International Atomic Energy Agency, IAEA, South Korea,
Egypt, Ray LaHood, Sam LaHood, India, Arab League, Jordan,
Gaza, Hamas, Ismail Haniyeh, al-Azhar mosque, Cairo,
Hezbollah, Palestinian Islamic Jihad, Iran, Russia, Israel,
Georgia, Tor-M1 missile, Stratfor, Strategic Forecasting Inc.,
Anonymous, European Central Bank, ECB, Italy, Mario Monti,
Long-Term Repo Operation, LTRO, cigarette warning labels

[Trevor]

Hmm, does anyone seriously believe that North Korea is going to give up its nuclear program in exchange for this? Are they out of their minds? From the sounds of things, yes. It hasn't worked before; it won't work this time. The only thing it might do is keep them from being hungry enough to start a war with the South.

[OLD1953]

I'm a bit bemused over that judge and the cigarette package images. So inaccurate speech is not to be allowed? That amounts to a gag order on the government, most especially on politicians. Going to be a very quiet election season if that idea holds up.

The EURO mess is a rathole. They can keep throwing money down the rathole, but they'll run out of money before they run out of rathole.

I know Hillary Clinton knows what fungible means. Food is fungible. Given that food is fungible, if North Korea has 100 bags of rice, and the Army needs 80 of them, and that means civilians starve unless they get 100 more bags of rice, and we send them 100 more bags of rice, then how did we NOT feed the NK Army? How can it matter which storehouse they take those 80 bags of rice from? The whole thing is just smoke and mirrors. And yes, we are paying them off to avoid war.

[mannfm11]

To start, John, I am rereading The Bubble That Broke the World. In 1930, it was the Germans that were over the barrel. France was screwing the mess up by taking the gold out of the US. Wall Street had gone around the world issuing debt to finance all kinds of bubbles, including a trade bubble. The trade bubble is now in China and Germany, Germany is now the country that is dictating debt issues and the same mess is prevalent. Will they manage any better with central banks not restrained by gold? I don't think so, as the debts are being maintained at some level and the last resort is government finance, which has become the most recent bubble. Private incomes aren't growing. Government finance is being pinched, as it has served to maintain bubbles that can't be maintained. What are they going to do for an encore? If the current trend holds, gasoline will be $10 a gallon and demand for everything else will collapse.

What is lost on the market is the LTRO in Europe requires the banks post collateral. This means they no longer own interest bearing assets and instead have non-interest bearing cash. The counter liability for this cash already exists and until they buy something with it or make loans, there is no monetary growth. If they buy the debt of Italy, Portugal, Spain and Ireland, it will merely rot on the balance sheet. I suspect the ECB has set itself up for a run on the Euro, the next time there is a loss of confidence. The US produces the equivalent of 11 million barrels of oil a day in natural gas, all of it cheap. It produces 1/2 its oil demand when natural gas liquids are included. This is not the case with Europe. The German economy is based on exports, yet most of its trade partners are broke and need to export themselves.

The way a central bank stops a run on their currency is they buy the money back by selling the assets on their books. The ECB is loaded up with junk debt and with such a run, they would be faced with attempting to liquidate this debt in the midst of a situation where the market for the debt would already be weakened. The alternative is to raise interest rates, which would also require selling their assets. This is where I think we are headed.

[OLD1953]

In 2007 the US was importing over 12 million bbl per day, now that figure is hovering at or a bit under 8 million. Gasoline was our biggest export in the last quarter of 2012.

People have a tendency to forget who the third biggest petroleum producer in the world is. Only Russia and Saudi Arabia produce more oil than the US.

http://www.usatoday.com/money/industrie ... 52298812/1

[Trevor]

It won't delay war with North Korea forever, or even for a long period of time. That country is essentially a concentration camp and I don't blame people for wanting to get the hell out of there. Course, we're being foolish again by thinking this will do anything to half their nuclear program.

Seems like Europe is closing their eyes and praying for a miracle with all of these bailouts. I expect it to stop soon once everyone runs out of money or when Italy and Spain will require them too.

[vincecate]

Seems like Europe is closing their eyes and praying for a miracle with all of these bailouts. I expect it to stop soon once everyone runs out of money or when Italy and Spain will require them too.

When there is a single government with a single central bank, then that government appoints people to the central bank and makes the laws governing the central bank. In this case I don't think there has ever been a government in this situation that "ran out of money" exactly, they just print as much as they want. If they get hyperinflation that currency becomes worthless, but until the end of the hyperinflation where nobody accepts that currency as money any more, the government does not really run out of money.

But Europe is not yet exactly a single country. So it is not so clear that the parts that need money will always be able to get the central bank to print for them. But there have been several big steps in that direction.