Why is Obama spending our non-existent money to bail out European banks?

Discussion in 'Current Events' started by ScreamingEagle, Sep 16, 2011.

  1. ScreamingEagle
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    ScreamingEagle Gold Member

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  2. Raoul_Duke
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    Raoul_Duke Member

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    The fed is just providing unlimited dollar swaps to foreign banks because they can't get dollars on the open market. The alternative to not providing them with access to dollars is that they become insolvent and unable to function, like what happened to Lehman Brothers. On the whole we'd rather avoid another Lehman-style meltdown so this time we're trying to prevent it from happening again.
     
  3. OODA_Loop
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    OODA_Loop Account Terminated

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    Yes choosing winners.
     
  4. Raoul_Duke
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    Raoul_Duke Member

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    Preventing losers, or at least trying to. The world has lost at least one and a half times global GDP due to the 2008 meltdown, probably eventually a lot more than that. There are still going to be massive economic problems ahead, this dollar deluge only fixes certain banks' liquidity problem, not their actual solvency problem, nor does it fix sovereign governments' solvency or banks' solvency, but at the very least it kicks the can down the road for a while and theoretically gives global policymakers a chance to fix things.
     
  5. ScreamingEagle
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    ScreamingEagle Gold Member

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    So instead of their banks reorganizing and taking their lumps.... we here in the U.S. get to pay for THEIR problems? Is this some socialist society rule...?

    And how can we pay for this? We are broke. The only way is to print more dollars....which means the American people get robbed through devaluation of the dollar.....increasing inflation...

    so now Obama is a "global policymaker" to the point where he sends Geithner out to take responsibility for foreign banking problems....?
     
    Last edited: Sep 16, 2011
  6. Raoul_Duke
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    Raoul_Duke Member

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    We swap dollars for euros or whatever other currency so we hold the same value until we're paid back. And then the Fed just cancels the dollars, in a poof of smoke, just like that! One of the many benefits of having a dreaded fiat currency.

    And this isn't some socialist thing, it's been standard practice for well over half a century before the advent of socialism, Marxism or anything similar. This kind of central bank intervention has been happening since 1826 when the Bank of England bought bonds and other assets for cash and greatly expanded the money supply after the canal bubble burst. Canals had promised to be a "transport superhighway*" that would mean English businesses linked by canals to British ports could vastly increase their business by taking advantage of the new technology to sell around the country, export etc.

    The bubble burst and for the first time in history, a central bank (they hadn't been around too long) intervened in the market. It worked really well and was standard practice after that, the evolution of central banks and their newfangled interventionist ways ending the previous couple of centuries of almost constant market panics, breakdowns, cessation of trade etc.

    The mechanism of using the wider banking system via the central bank to bail the system out was even standard pratice in America too, the government authorising JP Morgan to act as America's central bank in the panics of 1893 and 1907. They just didn't do it in 1929. Or initially in 2008.

    They did actually do unlimited dollar swaps in 2008 too, along with a couple of trillion dollars in loans to banks over and above the TARP, Maiden lane and similar bailout devices. We just found out about the two trillion due to a Bloomberg freedom of information request that finally got published. Can't remember Republicans making as much noise when that was going on back in 2008.

    And all this stuff about "devaluing the dollar is just yet more GOP garbage. It's absolute nonsense. Here's the historical dollar index chart -- that's the dollar valued against a basket of foreign currencies thus accuratley showing its value over the past decades:

    http://www.nytimes.com/imagepages/2007/09/22/business/20070922_CHARTS_GRAPHIC.html

    See the value of the dollar collapse under reagan? Can you remember the liberal media constantly banging on day after day about how Reagan was debasing the dollar? Me neither. Then see it climb in value under Clinton. Then see it collapse in value again under George W Bush. Again, rmember the liberal media constantly telling us that Bush was debasing the dollar? Me neither.


    Now you've heard a lot about how Obama is debasing the dollar. So the dollar must have absolutely collapsed in value since Obama took office, right? Here is what actually happened :

    [​IMG]


    Yep, it's collapsed in value to where it was under the Bush administration. like almost everything you've heard about deficits, debt and so on over the past few years, this whole dollar debasement/Obama printing money thing is just a huge pile of shit.

    And you don't have to worry about hyperinflation either. Worrying about imminent massive inflation is like worrying about how Obama is debasing the dollar.
     
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  7. Quantum Windbag
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  8. Quantum Windbag
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    Quantum Windbag Gold Member

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    We are shoring up the central banks of the countries so that each country can deal with the internal problems they have. We are not actually bailing out banks, and the risk is minimal because we are not assuming any liabilities.
     
  9. signelect
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    What a stupid question, you know he loves to spend money, he has no idea where it came from but there it is and he gets to spend it. Win Win for Obama
     
  10. Jarhead
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    Jarhead Gold Member

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    I defer to Raoul Duke on this. What he is saying seems to make sense. I really dont see this as the wrong action to take.
     

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