Europe to get bailed out by the IMF?

[WallyWeaver]

Could this be considered QE3?

Behind the scenes at the G-8 and NATO summit meetings, some significant decisions were made that will impact over the coming weeks.

The critical decision at the G-8 meeting and several of the bilateral meetings that took place on the sidelines of the Camp David gathering centered on the decision to plunge ahead with the bailout of the European banks in an effort to save the Euro system, with Greece still inside. President Obama is terrified that a financial meltdown of the Euro system will spill over into Wall Street and result in his losing the November elections. Behind the scenes around Camp David, Christine Legarde put the IMF squarely behind a bailout of the European banks, with the full backing of the Federal Reserve and Treasury in the United States to boost the leveraged lending of the European Central Bank (ECB) to prop up the European banks. ECB will take junk bonds and other vastly over-priced assets as collateral for loans to the Spanish, Greek and other European banks. This will offset an additional estimated $500 billion in new write-offs by bondholders of Greek debt.

The bottom line is that if Greece leaves the Euro, the contagion will spread overnight to Spain, Portugal, Ireland, and, perhaps, even Italy. So, the IMF, the Obama Administration and the ECB are all on board to further delay the reality of the financial and banking crisis through hyperinflationary measures. The idea is that the situation will take many months to fully play out, and Obama and his re-election team hope that the system will hold together past the November elections.

In his sideline meeting with new French President Hollande, Obama reached a full agreement on this perpetuation of the Euro. This is an area where Hollande and Merkel will agree to disagree. They both want to defend the Euro, but Hollande will continue to insist that the austerity must be limited and a growth program initiated. This is actually impossible to accomplish, but this is the growing perspective of the Eurosocialists, including Hollande and his colleagues in Germany’s Social Democratic Party (SPD) and the Italian Socialist Party (PSI). A majority of Greek voters are in favor of staying in the Euro, so long as the austerity is reduced.

Hollande will make another effort this week at the European Monetary Union heads of state meeting to push for Eurobonds, as one way to implement this bailout plan. Merkel will likely oppose and block this latest Eurobond argument. The total amount of assets on the books of the US Federal Reserve and the European Central Bank fall far short of the currently estimated 4 trillion euro liability of the European private banks.

This was the single-most important decision taken at the G-8 meeting, and it was a deeply flawed decision that will have severe consequences. For Obama, the crucial question is: Will the consequences hit before or after the November elections in the United States? This may be the deciding factor in the outcome of those elections.

Link: http://www.jsmineset.com/2012/05/27/behind-the-scenes-with-harry-schultz/

[The Machine]

This is definitely one to watch , we've already had QE3 here in the UK when the bank of England printed an additional £50bn ($81bn) back in february ..... and were officially back in resession just over 2 months later !! whats next QE4 ... QE5 .... QE6 ..... Gold @ $2,500/Oz +.

Cheers for posting WW

[WallyWeaver]

This is definitely one to watch , we've already had QE3 here in the UK when the bank of England printed an additional £50bn ($81bn) back in february ..... and were officially back in resession just over 2 months later !! whats next QE4 ... QE5 .... QE6 ..... Gold @ $2,500/Oz +.

Cheers for posting WW

Yep, this is good news for us M., no question. It has been a little depressing the past five weeks but this all but ensures gold in the $2,000's+.... and probably soon.

I posted this mainly for 20, though, even though it is beneficial to many of us. I know he is short on the Euro (FOREX) and I don't want him to lose his "shorts" (pun intended).

WW.

[The Machine]

Yep, this is good news for us M., no question. It has been a little depressing the past five weeks but this all but ensures gold in the $2,000's+.... and probably soon.

I posted this mainly for 20, though, even though it is beneficial to many of us. I know he is short on the Euro (FOREX) and I don't want him to lose his "shorts" (pun intended).

WW.

Yeah that would need to be addressed pretty soon or he'll loose more than his shorts, but thats just what I'd do, I wouldnt dream of telling someone else how to invest their money, I'll be very interested to read his reply to this article.... I've even dumped all hard euro currency there a few weeks back, just swaped it over for more Yuan (I think it's a pretty safe bet right now). I dont like leavineg too much money in my bank accounts for the banksters to play with.

[WallyWeaver]

Yeah that would need to be addressed pretty soon or he'll loose more than his shorts, but thats just what I'd do, I wouldnt dream of telling someone else how to invest their money, I'll be very interested to read his reply to this article.... I've even dumped all hard euro currency there a few weeks back, just swaped it over for more Yuan (I think it's a pretty safe bet right now). I dont like leavineg too much money in my bank accounts for the banksters to play with.

Good move on switching to the Yuan, in my opinion. I don't know if you saw this but it's definitley a move in the right direction for the Yuan:

Yen-yuan direct trading to start in June(AFP)–2 days ago

TOKYO — Japan and China are expected to start direct trading of their currencies as early as June as part of efforts to boost bilateral trade and investment, according to reports.

With the planned step, exchange rates between the yen and the yuan will be determined by their transactions, departing from the current "cross rate" system that involves the dollar in setting yen-yuan rates, Kyodo News said on Saturday.

The two governments are eyeing setting up markets in Tokyo and Shanghai, the Yomiuri Shimbun said.

The yen-yuan exchange system would help businesses in the world's second- and third-largest economies reduce risks associated with exchange rate fluctuations in the dollar and cut transaction costs, Kyodo said.

It will be the first time that China has allowed a major currency except the dollar to directly trade with the yuan, Kyodo said.

Link: http://www.google.com/hostednews/afp/article/ALeqM5jhqaTaT7LRk2gYyD05lmLJMDLJtQ?docId=CNG.78782f3a5fba2c9a595e61ea288f1c19.371

Agree on money in the bank, too; although I do have a decent percentage of my investment portfolio in my stock market brokerage account, but hopefully that will be okay. Banks make me nervous....

[The Machine]

Yeah I read about that a while back I wonder what effect this is going to have on the dollar ... with the world's second & third largest economies no longer trading with each other using Dollars surely confidence in the dollar is going to stagger but how much and how will this effect global markets.

The Euro is already tanking without any outside assistance lol , the dollar isn't far behind this move could be the straw that broke the camel's back.

Time will tell.

[The Machine]

Hey TM!

You were wise to dump your Euro's! A lot of people I know have switched their Euro denominated accounts into either US Dollars or the Japanese Yen.

Hey 20, yeah just caught that one in time. bought them at a good price and sold them at an even better one lol .... good thing is my bank doesnt charge for foregin currency transactions ( well other than the spread on the exchange) so I actually came out on top..... good thing too it does look like it's going to fall further. I really wouldnt be surprised to see the euro come closer to €1.30 to the pound in the coming weeks.

[carlos in san diego]

Thanks Wally Weaver, Machine, and 20MillionDinar for your information. It does not take a rocket scientist to figure out that anymore QE is only a short term bandaid on a gaping wound. I guess the object of the game is to continue to kick the proverbial can further down the road and deal with the problem later.

The part I did not like about the article is where it says that the US Fed will be backing the QE. That to me, means that the Banksters will be putting whatever it is they loan out on our backs. They will do as they have in the past, add these amounts to our national debts!

I guess my question to you all is....How long can they continue to" remedy" the problem by continuing to print more money? How long can they kick the can down the road? Since the move itself could be called hyperinflationary, as certainly would be any additional QE measures, is it possible that they could continue to print indefinitely?

My feeling would only be a guess because I have not seem the end game of this scenario...except in the history books. Germany, Chile, Brazil, Argentina, Zimbabwe, among a few. The only thing that stopped these hyperinflationary spirals were the people of those countries who were so tired of the foolishness that they took to the streets in protest.

On onother note...I don't think it's just Obama that wants to kick the can down the road and see if he can make it to November's election. It's both political parties that are trying to hide the truth from the American people by, not addressing the issues in a public forum. Both political parties do not dare use the issue against the other, for fear of letting the cat out of the bag and creating more questions among the American people than they can safely afford to answer. It's an illussion that must be maintained at all costs.

I believe it's agood thing for us that the Chinese and Japanese are considering using their own currencies amongst themselves. In reality...This should further accelerate the demise of the dollar. The sooner it collapses, the sooner we can get to the business of reconstructiion. So, what choise do they have? Use the dollar?

Despite those that say the dollar is still a good safe haven, I feel the proof is in the fact that the dollar is no longer being chosen by the Bric nations to transact the bilateral business. They see it as too risky and that using the dollar would only encourage the Banksters to continue the charade, prolonging the inevitable, and prolonging the missery among the people.

Carlos

[The Machine]

I guess my question to you all is....How long can they continue to" remedy" the problem by continuing to print more money?

Simple answer ... they could theoretically keep the printing presses running until it costs $1,000,000,000,000,000 to buy a loaf of bread ..... but I dont think it will get to that stage, something will be done long before that happens ..... What will be done I really i really cant speculate ..... chances are whatever they do will be the wrong thing anyway.

[Mongo]

you can't print worthless paper and turn around another countries economy with it??????......smoke and mirrors

[WallyWeaver]

This will in all likelihood slow down the collapse of the Euro, but it will not prevent it. You cannot get rid of garbage by spraying deodorizer on it. Eventually the deodorizer wears off and the stench comes back even worse because the rot doesn't stop... it's just temporarily masked.

The article is right though by basically saying this move better be timed just right, because the effects of QE haven't been lasting very long... The longer term effects are devastating for the common man!

Many good points here, 20.

Question: This article seems to be indicating that some portion of this new EU bailout will be "backed" by the US Fed. To put it plainly, I'm guessing most of the money for this bailout will be coming from us (the US) since the IMF doesn't have the capability to print its own money and, last I checked, the IMF was a little short on funds (article a few months back when Legarde took over). So if the US fires up the printers for this bailout won't that weaken the USD? Could it be possible that for the short term (over the next few months) the USD will weaken and the Euro will gain back some ground?

It seems to me that, unless they perform a stimulus themselves, maybe the GBP and the YEN will be moving up? What do you think?

And you're right about the tactics of Obama and the effect it will have on the common man..... unbelievable. So he's willing to sell the US down the river to get 4 more years in office? Could it be any more clear that this man does not care about the US at all? The bottom line is whoever takes the oath next January is going to walk into a serious crap storm. Thanks a lot Obama.

WW.

[HughJeffin Byrd]

the USD would be the #1 safe haven currency if we have another global financial crisis again.[/b]

Even if it loses its world reserve status?

Edited May 29, 2012 by HughJeffin Byrd