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Thread: What does this mean in "plain" language?

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    Default What does this mean in "plain" language?

    http://www.federalreserve.gov/newsev.../20080311a.htm

    Release Date: March 11, 2008

    "For immediate release

    Since the coordinated actions taken in December 2007, the G-10 central banks have continued to work together closely and to consult regularly on liquidity pressures in funding markets. Pressures in some of these markets have recently increased again. We all continue to work together and will take appropriate steps to address those liquidity pressures.

    To that end, today the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing specific measures.


    Federal Reserve Actions
    The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS. The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. As is the case with the current securities lending program, securities will be made available through an auction process. Auctions will be held on a weekly basis, beginning on March 27, 2008. The Federal Reserve will consult with primary dealers on technical design features of the TSLF.


    In addition, the Federal Open Market Committee has authorized increases in its existing temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB, respectively, representing increases of $10 billion and $2 billion. The FOMC extended the term of these swap lines through September 30, 2008.

    The actions announced today supplement the measures announced by the Federal Reserve on Friday to boost the size of the Term Auction Facility to $100 billion and to undertake a series of term repurchase transactions that will cumulate to $100 billion."

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    Default Re: What does this mean in "plain" language?

    Central banks are worried that noone is lending money to each other (when this happens, day to day business in many areas becomes harder in all sorts of ways). This has happened because everyone is afraid everyone else will go broke, so The Federal Reserve is expanding its short term loan programs to big institutions, in the hope that they will start lending money more freely again.
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    Default Re: What does this mean in "plain" language?

    thank you to both of u ^^ i was wondering myself





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    Default Re: What does this mean in "plain" language?

    ^^^ in a less transparent but extremely serious matter, the US is also guaranteeing the value of currency swap agreements entered into with other foreign central banks. Many such currency swap agreements already exist, and this meeting authorizes the issuance of billions more. This creates a potential situation where US taxpayers may find themselves on the hook to make good on the US dollar exchange rate losses of foreigners / foreign governments !

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    Default Re: What does this mean in "plain" language?

    Quote Originally Posted by Melonie View Post
    ^^^ in a less transparent but extremely serious matter, the US is also guaranteeing the value of currency swap agreements entered into with other foreign central banks. Many such currency swap agreements already exist, and this meeting authorizes the issuance of billions more. This creates a potential situation where US taxpayers may find themselves on the hook to make good on the US dollar exchange rate losses of foreigners / foreign governments !
    Today it was announced that AIG was paying Deutsche Bank and some french bank insurance money on bad swaps so the taxpayer is already bailing out the world.

    Not to mention it was announced Chase (bail out recipient) is investing nearly half a billion dollars in India for their computer/IT operations - bailout money for everyone!

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    Default Re: What does this mean in "plain" language?

    Quote Originally Posted by Melonie View Post
    ^^^ in a less transparent but extremely serious matter, the US is also guaranteeing the value of currency swap agreements entered into with other foreign central banks. Many such currency swap agreements already exist, and this meeting authorizes the issuance of billions more. This creates a potential situation where US taxpayers may find themselves on the hook to make good on the US dollar exchange rate losses of foreigners / foreign governments !
    Do you have a link for a credible source for this?
    Last edited by person; 03-17-2009 at 02:27 AM.
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    Default Re: What does this mean in "plain" language?

    ^^^ is the federal reserve website credible enough ? This was their original announcement ... which has since been extended and expanded




    Not to mention it was announced Chase (bail out recipient) is investing nearly half a billion dollars in India for their computer/IT operations - bailout money for everyone!
    This is no more outrageous than General Motors investing a billion dollars in US taxpayer money for a new Brazilian auto factory ...

    (snip)"SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

    According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the government and will be used to "complete the renovation of the line of products up to 2012."

    "It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil."(snip)




    Of course you won't see any real 'meat' in the US financial press on these issues. Instead US media is drubbing on $165 million paid out in AIG employee bonuses (many of whom are not US employees of AIG either !!!) while ignoring that $160 BILLION worth of AIG bailout money has wound up in the coffers of foreign owned banks and financial institutions as AIG uses its US taxpayer money to 'make good' on losing derivatives contracts it wrote with foreign financial institutions as counterparties ! Of course the dirty BIG secret is that the losing AIG derivatives contracts which have been disposed of so far are merely the tip of the iceberg ...

    ~
    Last edited by Melonie; 03-17-2009 at 05:19 AM.

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    Default Re: What does this mean in "plain" language?

    Quote Originally Posted by Melonie View Post
    ^^^ is the federal reserve website credible enough ? This was their original announcement ... which has since been extended and expanded

    http://www.federalreserve.gov/newsev.../20080918a.htm




    This is no more outrageous than General Motors investing a billion dollars in US taxpayer money for a new Brazilian auto factory ...

    (snip)"SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

    According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the government and will be used to "complete the renovation of the line of products up to 2012."

    "It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil."(snip)

    http://www.laht.com/article.asp?Cate...ticleId=320909


    Of course you won't see any real 'meat' in the US financial press on these issues. Instead US media is drubbing on $165 million paid out in AIG employee bonuses (many of whom are not US employees of AIG either !!!) while ignoring that $160 BILLION worth of AIG bailout money has wound up in the coffers of foreign owned banks and financial institutions as AIG uses its US taxpayer money to 'make good' on losing derivatives contracts it wrote with foreign financial institutions as counterparties ! Of course the dirty BIG secret is that the losing AIG derivatives contracts which have been disposed of so far are merely the tip of the iceberg ...

    ~
    There's a deep, dark, dirty secret involved here: GM's FOREIGN operations consistently show a profit. Without onerous union work rules and no cradle to grave health plan to pay for, as in the U.S., GM makes plenty of money overseas. E.g. Buick is the top selling brand in China.

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    Default Re: What does this mean in "plain" language?

    Quote Originally Posted by Melonie View Post
    ^^^ in a less transparent but extremely serious matter, the US is also guaranteeing the value of currency swap agreements entered into with other foreign central banks. Many such currency swap agreements already exist, and this meeting authorizes the issuance of billions more. This creates a potential situation where US taxpayers may find themselves on the hook to make good on the US dollar exchange rate losses of foreigners / foreign governments !
    Yes, but it can cut both ways. If the Dollar stays strong and the Euro continues to weaken, we might actually come out ahead.

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    Default Re: What does this mean in "plain" language?

    Quote Originally Posted by Melonie View Post
    ^^^ is the federal reserve website credible enough ? This was their original announcement ... which has since been extended and expanded

    http://www.federalreserve.gov/newsev.../20080918a.htm
    I don't see anything in that link about guaranteeing currency swaps, just about trading more of them...
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    Default Re: What does this mean in "plain" language?

    Melonie, if the losing AIG derivatives contracts are the tip of the iceberg, what's the iceberg? What is next?

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    Default Re: What does this mean in "plain" language?

    Adelina if I knew all of those answers I'd be 'retired' in Monaco or Lichtenstein instead of central America LOL. But the underlying point is an important one ... there are estimated to be nearly $100 trillion worth of face value derivatives contracts in existance, with nobody really knowing what financial institutions are holding what, and nobody really knowing their true value (or lack thereof). When these derivatives contracts are paid off / settled ( as in the recent example of AIG payouts to European financial institutions ) huge amounts of money must be converted from one currency to another. This has the potential to seriously 'rock the boat' in terms of currency markets / exchange rates. Enter US gov't backed currency swap agreements.

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    Default Re: What does this mean in "plain" language?

    Melonie, thank you so much for helping us understand what really goes on! We can't rely on the media to tell us the truth!

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