A detailed plan to leverage money in the euro-zone bailout fund is in an advanced stage of development, CNBC's Steve Liesman reported Monday, citing a European financial official. The plan would use a portion of money from the fund, known as the European Financial Stability Fund, to shore up capital levels in European banks. Another portion of it would be used as seed money for a European Investment Bank, CNBC said. The EIB would then form a special-purpose vehicle that would issue bonds and buy European sovereign debt, according to the CNBC report. Those bonds would then be used as collateral at the European Central Bank, the report added. Officials are awaiting the EFSF's approval by euro-zone governments before they announce the plan's details, according to the report.
(Dow Jones) Detailing its latest stimulus plan, dubbed "Operation Twist," the Fed said it will buy and sell a total of $44B worth of Treasury securities each month through 13 purchases and six sales. The Treasurys market showed no reaction, as the overarching plan was announced last Wednesday. Benchmark 10-year notes down 26/32 to yield 1.895%. Still, analysts saying the interesting detail is that the Fed will be buying $13B in long bonds each month, exactly the same amount of 30-year bonds that are auctioned each month. This will take a significant amount of supply out of that end of the market.
Multi-trillion plan to save the eurozone being prepared
European officials are working on a grand plan to restore confidence in the single currency area that would involve a massive bank recapitalisation, giving the bail-out fund several trillion euros of firepower, and a possible Greek default.
Read More: http://www.telegraph.co.uk/finance/financialcrisis/8786665/Multi-trillion-plan-to-save-the-eurozone-being-prepared.html
Twist Paves The Way For QE III
Earlier this week the Federal Reserve ignited a firestorm in the global markets by admitting that the U.S. economy is facing downside risks. Although it continues to sugar coat the unpleasant reality, never has such a stunningly obvious statement resulted is so much turmoil.
But many of those who oppose QE3 do so because they believe the economy doesn't need more stimulus not because the stimulus itself is causing the economic weakness. As a result when the economy deteriorates, support for QE III could grow. In the end QE3 will likely be far more popular than another bank bailout (possibly to be called TARP II), which may be on the table if the Fed fails to rescue the banks it may be pushing over the edge with the Twist.
America's debt woe is worse than Greece's
Boston, Massachussetts (CNN) -- Our government is utterly broke. There are signs everywhere one looks. Social Security can no longer afford to send us our annual benefit statements. The House can no longer afford its congressional pages. The Pentagon can no longer afford the pension and health care benefits of retired service members. NASA is no longer planning a manned mission to Mars.
Read More: http://edition.cnn.com/2011/09/19/opinion/kotlikoff-us-debt-crisis/index.html?hpt=hp_t2