Here is the latest version of the Bloomberg story about the Fed and its 'flood of dollars.' It has its own link now here.
Interesting twist, on the Bloomberg News headline page here, the subject title has become "Fed Lets Europe Central Banks Offer Unlimited Dollars, Removes Swap Limits"
Don't mind us, we're just getting a chuckle out of the Bloomberg's editorial changes trying to strike a politically correct description of what the Fed is doing.
We think its the right thing to do by the way, since it will relieve the highly artificial short squeeze in dollar over in Europe because of their regulatory failures.
We will be much more impressed if, after they relieve the short term credit squeeze, they actually do something about it besides setting more useless standards that remain unenforced. The failure of the European Union banking regime is breathtakingly ironic given the hubris they had been proudly wearing as late as three or four weeks ago.
And listen up, cats and kittens, no matter what Paulson and his global crew of merry pranksters do in the short term, the US economy is in an absolute mess. A stronger dollar is going to strangle exports, but continue to strengthen the financial sector. That is not a prescription for change, but rather more of the same malinvestment and destructive wealth transfers with less stability.
Whoever become the President next year will get to start with a $2 Trillion deficit, largely wasted on consumption, profitless war, and golden parachutes for Wall Street.
Fed Releases Flood of Dollars, Market Rates Fall (update 3)
By John Fraher and Simon Kennedy
Oct. 13 (Bloomberg) -- The Federal Reserve led an unprecedented push by central banks to flood the financial system with as many dollars as banks want, backing up government efforts to revive confidence and helping to reduce money-market rates.
The European Central Bank, the Bank of England and the Swiss National Bank will offer European banks unlimited dollar funds with maturities of seven, 28 and 84 days at fixed interest rates against ``appropriate collateral,'' the Washington-based Fed said today. The Fed had capped at $380 billion the currency it would swap with the three central banks.
Global economic leaders have redoubled efforts to unfreeze credit markets and avert the worst worldwide recession in thirty years after last week's 20 percent slide in the MSCI World Index. Policy makers from the Group of Seven nations are committed to taking ``all necessary steps'' to stem a market panic, and European and U.S. governments today outlined plans to avoid banks failing.
``Like high waves that have gathered tremendous pace, global policy initiatives are coming to crash on the markets' shores,'' said Alex Patelis, chief international economist at Merrill Lynch & Co. in London. ``A turning point could be reached.'' (What is going to crash on our shores are a wave of dollars and Treasuries as the world realizes that there is a penalty in carrying an excess of our currency. But that step is yet to come, when the Treasuries plunge as we have said before. - Jesse)
The cost of borrowing in dollars for three months today fell to 4.75 percent from 4.82 percent, the highest this year. The rate for euros over the same timeframe declined to 5.32 percent from 5.38 percent...
“Thus, it should be understood that when pro-US figures use the term, 'rules-based international order,' they are not referring to anything analogous to the rule of law. Quite the opposite, they are using Orwellian language to describe a system in which essentially no rules can be established and/or observed, given that the dominant state has the prerogative to violate and/or rewrite “rules” at its whim.” Aaron Good, American Exception