"Europe's Solution"

[trading1]

To read the alot of the press [ft.com etc] it seems to be a given that "who has solved this credit crisis? It's been Europe, and Gordon Brown in particular".

They do not elaborate however to point out why it is Europe or Gordon Brown. There has been government bailouts in Europe but in what way is this the solution that they are claiming and how does it differ from US earlier efforts?

 

[intradaybill]

Quote from trading1:

To read the alot of the press [ft.com etc] it seems to be a given that "who has solved this credit crisis? It's been Europe, and Gordon Brown in particular".

They do not elaborate however to point out why it is Europe or Gordon Brown. There has been government bailouts in Europe but in what way is this the solution that they are claiming and how does it differ from US earlier efforts?

I asked mccd this question. The EU solution is to give money directly to the banks to lend. They think the liquidity trap may be bypassed this way because banks won't have problems to lend money at a nominal interest rate below inflation rate.

 

[trading1]

Quote from intradaybill:

I asked mccd this question. The EU solution is to give money directly to the banks to lend. They think the liquidity trap may be bypassed this way because banks won't have problems to lend money at a nominal interest rate below inflation rate.

Interesting. Why doesn't the FED adopt a similiar approach. Isn't the FED making funds available to banks to lend, or are the FED funds just to help the banks themselves rather than for lending?

 

[just21]

The Dear Leader, McF*cks, solution to solve a borrowing binge with more borrowing is being comprehensively rubbished by Chancellor Merkel and her finance minister. The German finance minister said that following lemmings over a cliff is not necessarily the right thing to do. So I wouldn't call it a European solution.


"Just because all the lemmings have chosen the same path, it doesn't automatically make that path the right one."

http://www.spectator.co.uk/coffeehouse/3058881/jumping-off-a-cliff.thtml

 

[intradaybill]

Quote from trading1:

Interesting. Why doesn't the FED adopt a similiar approach. Isn't the FED making funds available to banks to lend, or are the FED funds just to help the banks themselves rather than for lending?

The EU solution is a bit more complicates than that, of course, the governments will buy preferred stock of banks with this money and also receive a return on the invested money and also may place people on their boards to make sure that lending is directed towards corporations and people that need it.