Leaders Announce United Europe Banking Agreement
Tuesday, October 14, 2008 3:05:45 AM
Angela Charlton And Emma Vandore of the Associated Press report in Europe Puts $2.3 Trillion On Line For Banks report that European governments overcame their differences to put $2.3 trillion on the line Monday in guarantees and other emergency measures to save the banking system in their most unified response yet to the global financial crisis.
The pledges by six countries that use the euro and Britain helped soothe stock markets, along with a promise by top central banks to provide unlimited short term dollar credits.
The amount — pledged by Germany, Britain, France, the Netherlands, Spain, Portugal and Austria — dwarfs the $700 billion rescue package put together by U.S. President Bush's administration, although not all the European money will necessarily be spent.
It represented Europe's most unified response yet to the financial crisis, after weeks where European governments often acted at cross purposes and sniped at each other — a piecemeal approach that failed to stop steep and frightening slides on financial markets.
Sarkosy announces a United Europe Framework Agreement where European Central Banks take unified action to resolve the financial crisis
"The time of each one for itself is fortunately over," French President Nicolas Sarkozy said, following a Cabinet meeting that approved France's spending in the framework of the scheme.
"United Europe has pledged more than the United States," added the French leader, who has taken a lead in corralling European governments to act together.
The money pledged by European governments will not go into a collective pot. Instead, governments were deciding individually how much to commit to supporting their own banks under broad guidelines agreed at a summit on Sunday. The sums are considered a maximum, and might not all be spent if the financial crisis eases.
About 250 billion euros ($341 billion) of the European pledges was earmarked to be spent on recapitalizing banks by buying stakes.
Central Banks To Guarantee Commercial Lending Through 2009
The money pledges put a price tag on the package agreed to Sunday by the 15 countries that use the euro currency. They agreed to individually guarantee bank refinancing until the end of next year, rescue important failing banks through emergency cash injections and take other swift measures to encourage banks to lend to each other again.
Stocks markets rebounded Monday after the European decision and other weekend efforts to find solutions to the financial crisis, which has crushed major banks in both the U.S. and Europe and battered stock exchanges worldwide.
The Fed And The ECB Announce Unilimted Short Term Credit In US Dollars To Financial Institutions
Also helping markets was a joint move by the U.S. Federal Reserve, the European Central Bank and the Swiss National Bank to provide unlimited short-term credit in U.S. dollars to financial institutions. The Bank of Japan said it was considering similar measures.
Europe's biggest economy, Germany, put together a rescue package worth as much as 500 billion euros ($671 billion) to shore up the country's financial system. "We are taking drastic action, no question about it ... so that what we have experienced is not repeated," German Chancellor Angela Merkel told reporters.
France And The PIGS To Guarantee Bank Loans And The Netherlands To Guarantee Interbank Loans
Sarkozy said the French government would provide up to 360 billion euros ($491 billion) to help banks, most of that in guarantees for bank refinancing. The Netherlands put up 200 billion euros ($273 billion) to guarantee interbank loans.
Austria's government offered up to 85 billion euros ($116 billion). Portugal guaranteed 20 billion euros ($27 billion) euros — nearly 12 percent of annual GDP — to encourage Portuguese banks to lend to each other. Italy did not earmark a specific amount but Finance Minister Giulio Tremonti told reporters the government would offer "as much as necessary." Spain said it would guarantee up to 100 billion euros ($135 billion) in a bank bond issuance this year.
The European moves are modeled on Britain's 50 billion-pound ($88 billion) plan to partly nationalize major banks. Prime Minister Gordon Brown has also promised to guarantee a further 250 billion pounds ($438 billion) worth of interbank loans to restore confidence in the financial sector.
The head of the International Monetary Fund welcomed the European decision despite the high price it is expected to impose on state budgets.
"We must recapitalize the banks ... otherwise everyone will suffer," Dominique Strauss-Kahn said on France's Europe-1 radio Monday. "And that costs money."
The euro zone leaders who met Sunday have yet to sell their packages to voters at home, and analysts warned that governments and legislators could still balk. The overall cost will be heavy, especially on countries already in or on the brink of recession.
Analysts from the banking sector generally saluted the euro zone measures. "After a haphazard start, Europe is finally getting its act together," Bank of America said in a research note. "The size and nature of the national plans suggest that they could finally make a difference."
The rest of the 27-member EU will have a chance to sign up to the euro-zone measures when they meet Wednesday.
Norway, outside both the euro zone and the EU, said it plans to offer new government bonds worth 350 billion kroner ($55.4 billion) to banks to help improve liquidity in the market.
In Sweden, Finance Minister Anders Borg said the government plans to put forward a draft law Wednesday to guarantee new bank debt until the end of 2009 and support banks with added share capital.
BusinessEurope — a group representing most European major companies — said EU governments' parallel moves to unfreeze bank lending would help "reinforce confidence and contribute to a continued flow of credit to companies and households."
Recapitalization is one of the purposes of the United Europe framework agreement. There is an admission that the ability of the banks to raise capital is gone, capitalism as an economic system died: it is kaput, gone, it is history.
The governments of Europe and Australia and New Zealand have just nationalized banking. The banks and the governments are one. The government is now banker.
The governments are guaranteeing the safety of all monies invested in their banks; the governments are saying there will be no loss of principal.
The European countries, New Zealand, and Australia, UK and the their taxpayers now own the banks and their debt, lock stock and barrel. The risk of loss on the loans and the risk of exposure on all kinds of derivatives has been passed to the citizens of these nations. Profits have been privatized to the elites and losses socialized unto the public.
Keep in mind that the debt on the bank's books, is debt, that is marked-to-fantasy, as the fair value accounting of the SEC and the FASB 157 have been tossed out the window. This means the tax payers are not only enslaved to debt, they have been enslaved to the worst of debt, that is highly leveraged CDOs and subprime and alt-a loans.
The governments have become title owner to massive amounts of real estate world wide; and is in the terrible position of having to foreclose on people and force them out of their homes pending sale of the properties as they go under.
A bloodless political and economic coup was announced today as financial organizations and governments are integrated in state corporate rule.
Government rather than trust between lender and debtor is now the engine of commerce and trade.
Lending may start; and then again it may not start. The Ted Spread may still trade high as bankers perceive risk of lending. Bankers may not lend, they do not have to lend; and companies may not borrow if the Ted Spread does read high; so lending may not take place and the European financial market place go into meltdown despite the announcements.
Only a portion of lending markets world wide are affected; little is changed in the US; a credit gridlock, that is a lending gridlock still exists in the United States; this is going to take the world financial system down within days.
Stocks rose today Monday October 13, 2008. Nevertheless, a global stock market meltdown is still underway as credit default swaps on Lehman Brothers, having been settled must be paid from funds that are not available; those liable on the default swaps simply do not have the money to pay; and the amount is terrifically large.
The governments should have decleared 'force majeure' on all derivatives of every type; the risk of default by all kinds of companies still remains, and so do the credit default swaps, which cannot be paid or honored.
Two things have changed, first taxpayers have a greater financial liability. And second, indeed a polictical and economic coup has been achieved unifying state, bank, finance and lending into one ruling unit in the European countries; and this is a fulfillment of bible prophecy found in of the First Horseman of the Apocalypse. The horse is white signifying conquest over mankind, and the fact the rider has a bow with no arrows, foretells a bloodless coup.
The Scripture reference is Revelation 6:1-2 where the NIV relates: "I watched as the Lamb opened the first of the seven seals. Then I heard one of the four living creatures say in a voice like thunder, "Come!" I looked, and there before me was a white horse! Its rider held a bow, and he was given a crown, and he rode out as a conqueror bent on conquest".
Here is one artist's rendition of the four horsemen of the apocalypse.
Arlen L Chitwood relates the Greek word "crown" here is "stephanos" or "conqueror's crown"; a number of leaders have conquered capitalism and replaced it with state corporatism.
God is Sovereign, and as such from eternity past, foreknew, foresaw, and worked out today's events; everything is working out according to his foreordained plan.
European nations will one day very soon be completely integrated with a common ruler and a chief banking officer
Note that Sarkosy announced a United Europe Framework Agreement where European Central Banks take unified action to resolve the financial crisis, saying "The time of each one for itself is fortunately over", ... "United Europe has pledged more than the United States".
The vision and call of Timothy Geithner for unified regulation of banking globally is clarion and cannot be resisted. Soon Europe will be taking more unified action, as economic conditions deteriorate. The result will be unified banking, financial and investing regulation throughout Europe, and a Chief Banker, a Seignior, will arise to rule banking in Europe, this being held forth in bible prophecy of Revelation 13:11-17
The debt on the bank's books should have been liquidated, that is done away with, but it still abides.
The Liquidation Thesis holds that this debt must be liquidated, that is done away with; economic nature cannot be resisted; the debt will be liquidated and government services and payments, as well as service sector jobs, of all types, being unsustainable, will be done away with as well.
The investment application remains unchanged
I recommend that one be invested in gold, because of financial system instability, lack of liquidity and because of possible inability of the US government to make good on its surety promises of insuring bank accounts, brokerages, money markets and now commercial paper. I recommend diversification of investment in gold in four locations immediately, yes immediately: the gold ETF, GLD, directly through streetTRACKS Gold Trust, and not in a brokerage account; two BullionVault, three GoldMoney; and four a limited number of gold coins purchased from sources like Kitco.com.
Gold could easily fall from today's $830 to $820 and $800; this simply would make for a most excellent buying opportunity. The chart of gold relative to stocks, GLD:VTI, shows a pop higher, which suggests too that gold could fall lower.
Yet, I believe gold will stay above $820, as physical supply shortages are reported at jewelers and at coin dealers.
There is an important spiritual question: who is trustworthy?
The european governments and those of Australian and New Zeland are calling for confidence and trust.
I trust that physical gold will preserve my wealth; and thus I have close physical control of it, as indicated above.
I find God and His Word alone to be trustworthy. I believe that He is the Trustworthy One. I believe in the doctrine of the Election of Grace. And thus, I believe that God from eternity past chose me to believe in Him, and gave me the desire and insight to call on His name and be saved. I believe that God, will preserve me from sin until my Judgement Day. I believe that I am going on soon, to rule and reign with Christ, for a thousand years here on planet earth.
There is a great division in doctrine in Christianity between those of the Armenian persuasion and the Reformed persuasion. The former holds that one chooses Christ; and the latter holds that Christ chose the believer. I am of the latter position with support coming numerous bible references such as Revelation 13:8: my name got written into the Lamb's Book Of Life from before even a molecule was formed.