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  • hansesteelyard hansesteelyard Feb 27, 2013 11:51 AM Flag

    Central Bank risk - Eurozone...

     

    an example of risk from central bank manipulation of interest rates: External position of Bundesbank, October 2007 to January 2013

    billions of euros owed to Bundesbank by European Central Bank and in turn by Southern European banks to the European Central Bank.

    10.2007, 65.46
    1.2008, 93.69
    7.2008, 94.24
    1.2009, 133.69
    7.2009, 161.96
    1.2010, 177.76
    7.2010, 271.22
    1.2011, 302.62
    7.2011, 343.66
    1.2012, 498.13
    7.2012, 727.21
    1.2013, 616.94

    (see Time series BBK01.EU8148B: MEMO ITEM: External position of the Bundesbank since the beginning of EMU / Claims within the Eurosystem / TARGET 2 (net), Deutsche Bundesbank)

    These balances keep rising because interest rates are too low and consumption of goods & services is too high Southern Europe. To maintain high spending levels requires endless borrowing by Southern Europeans, loans which Germans refuse to make, but which the European Central Bank has taken upon itself to force Germans to make through its monetary policy. Other countries such as the Netherlands, Luxembourg, Belgium also are suffering transfers of wealth south to support failed states...

    This can only be maintained for so long. At some point Germany will tire of this theft of its national wealth. The benefits of abandoning the euro and preventing further transfers will exceed the short term losses, losses which the Bundesbank has the gold to offset presently. That would be the end of the euro. The tsunami of losses this would unleash on Wall Street from bets on Southern Europe would be massive. Commodities would plummet worldwide as Southern Europe's economy utterly collapsed.

    This topic is deleted.
 
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