The Center of the Universe

St Croix, United States Virgin Islands

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Secret Greek Fund Revealed

Posted by WARREN MOSLER on May 22nd, 2012

Except it’s just about an ‘allowable entry’, not a ‘fund’.

The BOG, functionally a ‘branch’ of the ECB, just ‘accounts for’ negative member bank balances as loans.

Presumably on a ‘legally’ collateralized basis.

That’s what CB’s do in the normal course of business.

CB’s don’t ‘have funds’ in their currency of issue any more than the scorekeeper in a card game has any points.

Europe Shares Seen Higher; Secret Greek Fund Revealed

By Matthew West

May 22 (CNBC) — European shares were set to open higher on Tuesday as investors came to the conclusion that the markets were most likely over-sold and news emerged overnight of around 100 billion euros ($127 billion) of liquidity provided by the European Central Bank to the Greek central bank to prop up Greece’s financial system.

19 Responses to “Secret Greek Fund Revealed”

  1. Brian Says:

    Is the BOG (or the Bundesbank for that matter) operationally a subsidiary the ECB under current law? If so, what’s all this fuss about TARGET2 imbalances?

    Reply

    Neil Wilson Reply:

    @Brian,

    The other way around.

    The ECB is a joint venture of the National Central Banks – of which the Bank of Greece is one party.

    The National Central Banks settle with each other by means of a simple overdraft system – which is what the TARGET2 ‘imbalances’ are.

    If all the money ends up in German Banks, then the Bundesbank is up in TARGET2 and everybody else is down. The net result remains zero.

    The Germans might get excited about that, but ultimately its just a bunch of numbers on a spreadsheet.

    Reply

    WARREN MOSLER Reply:

    yes, and agreed. some banks have positive balances at the CB, and some have loans collateralized as agreed.

    Reply

  2. y Says:

    Francois Hollande is calling for the ECB to engage in quantitative easing, or even lend to governments directly.

    The Polish Finance Minister has written an article for the FT calling on the ECB to purchase an “unlimited” quantity of european govt bonds.
    ft.com “desperate times call for desperate measures”.

    Reply

  3. Save America Says:

    Switzerland says pirate ships and golden coins are the future! ;) Going back to the gold standard, you are losing the game Warren!

    http://www.zerohedge.com/news/swiss-parliament-examines-%E2%80%98gold-franc%E2%80%99-currency-today

    I wonder if UBS feels some hate after US IRS tax man spank them.

    Reply

  4. John Wilkins Says:

    Warren: Did you see this talking about you?

    http://www.concertedaction.com/

    Reply

    WARREN MOSLER Reply:

    thanks, he wasn’t listening carefully enough

    Reply

  5. Remco Says:

    Argh, wrote a reply but lost it. So in short:

    This is about ELA (Emergency Liquidity Assistance) and has been going on for a long time (particularly in Ireland and Greece, but also Cyprus). It’s lending to banks who don’t have adequate collateral for main refi ops.

    The fact that the Gov Council increased the ceiling is not really relevant…they will do it as long as the banks as solvent and Greece is in the Eurozone. Maybe its a bit comparable with increasing the US debt ceiling ;-)

    Reply

  6. roger erickson Says:

    From the article:

    “I do sense greater urgency now than perhaps existed two years ago or two and a half years ago,” Obama said.

    Wow. Makes me feel better already.
    He didn’t “sense” anything at all 4 years ago?
    How long until his spidey sense tingles again? Once we’ve cleared the drain trap we’re swirling through?
    This is a stunning confluence of sensory systems, analytical pace, and action. In fact, we’re still stunned, and are slow getting up off the mat.

    Reply

    Save America Reply:

    @roger erickson, There was a democratic strategist on cspan this morning saying Obama had a choice when he came into DC, worry about the past and punishing wallstreet and sending CEO’s on perp walks (while rome burned), or focusing on the future and trying to save the nation that was on fire and forgetting about punishing them.

    Bill Black seems to be saying that while Rome burned, Obama should have spent time and resources sending ceo’s to jail as was done during the 80′s.

    As much as I like bill black, and dislike Obama, I am glad Obama tried to make energy revolution job 1 of his presidency instead of wall street punishment, but he failed in that too.

    What does Obama have left to tout that he is an effective leader? What did he really get done the past 4 years?

    He attacks romney and bain capital but now has to pull his foot out of his mouth because of this Lavine dude who is an Obama friend and also works for bain capital:

    BAIN PAIN — FOR OBAMA? ABC’s Jonathan Karl reports: A top Obama donor and fundraiser had a much more direct tie to the Bain Capital/Ampad controversy, which the Obama campaign used in a web video yesterday. In fact, this individual actually served on the board of directors of Ampad. Jonathan Lavine is a long-time Bain Capital executive and co-owner of the Boston Celtics. He is also one of President Obama’s most prolific fundraisers.

    Maybe the big picture is that bain capital and its peers have vampire tentacles into both parties too deeply and the whole system needs to be redesigned and reworked. It won’t matter who wins until the government is redesigned.

    Reply

  7. walter Says:

    Warren,

    All in all it doesn’t look like things are going to develop in the direction of cutting off Greece.

    There is some talk going around about the possibility for Greece to have a second currency parallel to the euro.
    Deutsche bank also came with such an idea, the “Geuro”.
    http://www.cnbc.com/id/47505085

    To me it looks like an attempt to give part of the issuer status back to the member states.
    In fact that is also what already happens in your tax backed bonds proposal (Mosler bonds).

    What do you think of this idea of Deutsche bank? (which is of course worse than your Bonds ;) )

    Reply

    MamMoTh Reply:

    @walter, seems to me that’s cutting off Greece from the Euro for all practical purposes?

    Reply

    WARREN MOSLER Reply:

    it’s incomplete with lots of loose ends but it’s now ok to discuss such things which is encouraging

    Reply

    roger erickson Reply:

    @WARREN MOSLER, Yes. It’s the slow process of letting the Austerians save face, before capitulating.

    Let’s just hope it goes smoothly. Took a long time coming, but late is slightly better than never … if it proceeds in time.

    Reply

  8. cig Says:

    Bit tangential issue, but what do you think of a carry trade: basically what if you had the ECB commit to keep the base rate +x% above short German paper rates (next two year issue pays about zero, so there’s at least some market demand for German paper below ECB base rate). Then the German gov can issue as much quality collateral as the market wants with no risk, and collect the difference for growth/stimulus/bail-outs/whatever.

    Reply

  9. Alexander Says:

    Very true, it is simply fake money invented on central banker computers so re-arranging the 0s and 1s can be done indefinitely in an attempt to keep people enslaved.

    But ultimately you’d think people will figure it out and go back to an economy based on productive value. You know produce something of value and exchange it for something else of value.

    The currently ‘wealth’, people like Warren Mosler, simply invented scams through which to transfers fake electronic central banker money for things other people create with real productive work.

    This by any definition makes Warren Mosler an unAmerican con-artist.

    Reply

    Save America Reply:

    @Alexander, Warren is our man on the inside, in like flynn! He is the modern day robin hood! He reminds me of Ed Exley from that great movie LA Confidential, who realizes the system has been corrupted and not doing good for the people and willing to swing a wrecking ball to demolish the very system that has enriched him.

    We need to clone warren mosler! You think Jimmy Cramer or Bain Capital executives are going to come out and say we need jobs gaurantees to keep idle labor busy? We need to remove the treasury bond system? Mosler says lets legalize dope, a promise even Obama lied about and Kimmel destroyed him with at the press correspondents dinner.

    Mosler is your man dude, you need to spread his ideas.

    I think Warren can agree that him being able to send a bean pit trader who is known for making errors often to fool other bond gods into a scam trade is silly, and the whole system needs a big ole reset! You won’t hear jimmy cramer writing a book admitting he was laddering traders and watering IPO’s.

    Reply

    Unforgiven Reply:

    @Save America,

    I think Warren’s got to have the In Like Flint ringtone:

    http://mark.rehorst.com/Skype_Flint/index.html

    Reply

    Save America Reply:

    @Unforgiven, LOL! Straight to the white house!

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>