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a friend of mine sent me this, thought is was worth the post for all to read.
I was doing some reading this weekend on the debacle in Europe. The ECB opened its gates and printed a lot of euros and loaned them out to the European banks this past week. The ECB is forbidden according to the constitution of the Euro Union from directly loaning money to the Countries in risk of default. They are not forbidden from making loans to the major financial players. The big banks borrow at near 0 interest and turn and loan to Greece at a rate commensurate to the country's current risk rating. The banks know they will probably never be paid back. You then ask "why would they loan if they know they will never be payed back". The answer is simple , the loans are guaranteed, by whom you ask, The Federal Reserve. The Fed is selling the ECB C.D.S's (currency default swaps) which is insurance against default. Once the default happens, the Fed will have no alternative but to pay by printing dollars for not only the principal but interest as well. Right now this would mean the US would have to pay approximately $1.3 dollars for every euro lost. Who then pays the bill for the European default, the citizens of this country. We pay through inflation of our currency. The world will be flooded with US currency that will kill our buying power, thus eliminating the middle class. The average citizen in this country is unaware that the crisis over there will affect us. The average attitude is "that is their problem". Unless we change the leadership in this country, we are screwed. I am not talking about the Republican party. The Democrat and Republican party are the same but with different masks. Nothing economically changes once either is elected. I personally do not think anything will change because the masses don't see what is going on.. I think we need to do what we can but it will take some organization and someone far smarter than me, (Elias,Paul) lol. I have vented for the day. Have a good weekend.
I was doing some reading this weekend on the debacle in Europe. The ECB opened its gates and printed a lot of euros and loaned them out to the European banks this past week. The ECB is forbidden according to the constitution of the Euro Union from directly loaning money to the Countries in risk of default. They are not forbidden from making loans to the major financial players. The big banks borrow at near 0 interest and turn and loan to Greece at a rate commensurate to the country's current risk rating. The banks know they will probably never be paid back. You then ask "why would they loan if they know they will never be payed back". The answer is simple , the loans are guaranteed, by whom you ask, The Federal Reserve. The Fed is selling the ECB C.D.S's (currency default swaps) which is insurance against default. Once the default happens, the Fed will have no alternative but to pay by printing dollars for not only the principal but interest as well. Right now this would mean the US would have to pay approximately $1.3 dollars for every euro lost. Who then pays the bill for the European default, the citizens of this country. We pay through inflation of our currency. The world will be flooded with US currency that will kill our buying power, thus eliminating the middle class. The average citizen in this country is unaware that the crisis over there will affect us. The average attitude is "that is their problem". Unless we change the leadership in this country, we are screwed. I am not talking about the Republican party. The Democrat and Republican party are the same but with different masks. Nothing economically changes once either is elected. I personally do not think anything will change because the masses don't see what is going on.. I think we need to do what we can but it will take some organization and someone far smarter than me, (Elias,Paul) lol. I have vented for the day. Have a good weekend.
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