Interesting thread


Fed Pumps Further $630 Billion Into Financial System

"Basically the huge currency swaps are portrayed as "world wide demand for dollars" when actually the US needs the foreign currency." Ablebonus @ 2008-09-30 02:38:39

US, Europe, Japan planned dollar rescue: Nikkei

TOKYO - The United States, Europe and Japan planned joint intervention to rescue the dollar when it was plunging in March at the time US investment bank Bear Stearns collapsed, the Nikkei business newspaper reported.

Officials from the US Treasury Department, Japan's Finance Ministry and the European Central Bank reportedly drew up a currency contingency plan over the weekend of March 15-16, the Nikkei said, citing sources familiar with the situation.

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The officials did not specify levels for initiating the dollar rescue plan, but in the event of a free-fall they agreed to coordinate aggressive buying of the greenback and sell yen JPY and euros EUR, the newspaper said.

‘If downside risks to the dollar emerge from here on, the market will keep in mind the possibility of similar action by authorities,’ said Takahide Nagasaki, chief foreign exchange strategist for Daiwa Securities SMBC.

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Even as the dollar slid after the flare-up of the credit market turmoil last August, there had been a perception among market players that US authorities were willing to tolerate falls in the dollar in a policy of ‘benign neglect’, to help support US exports as the economy faltered.

But market players detected a shift in US officials' stance towards the dollar in June when Federal Reserve Chairman Ben Bernanke issued a rare warning on the inflation risk posed by a weak dollar, and Treasury Secretary Henry Paulson declined to rule out intervening in currency markets.

Under the intervention framework, Japan was to supply yen through currency swaps. The plan also called for using a previously established swap mechanism between the United States and Europe.

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"THE FEDERAL RESERVE BANK OF THE UNITED STATES OF AMERICA IS BROKE AND CAN NO LONGER CONTROL MONETARY POLICY, just like the ECB." Leraconteur @ 2008-09-30 06:08:56

"That's quite a statement leraconteur.

However, that would explain why LEH and AIG blewup is the fed was unable to lend to keep them afloat. It would explain why the investment banks were trying to latch onto depositors funds. It would explain the type of scenario that could be explained to congress and leave them silenced and mouth agape. It would explain why this bill has the support it does in the face of 300 to 1 constituents support. It would explain why many (Bush, McCaine, Obama, democrats) keep saying "it will pass". It would explain the need for congressional martial law in the house. It would explain the large swaps that are increasing in size and frequency." 127001 @ 2008-09-30 06:51:54

Banking crash hits Europe as ECB loses traction

"The ECB is no longer able to inject liquidity because the money is just coming back to them again. This is extremely serious. If monetary policy is no longer working, there is a risk that the whole system will blow up in days," he said.

Currency Swap