Monday, May 10, 2010

The Fed Sails to Europe's Rescue?

It took 20 months for the Europeans to garner a U.S. sized bailout. The Federal Reserve is helping via currency swaps.

by providing as many dollars as needed
The prior incarnation of the swaps peaked at $583.1 billion in December 2008, with deals encompassing 14 other central banks.

Officials at the Fed saw multiple risks to the U.S. expansion from continued turmoil in Europe, such as crimped trade, declining confidence, and financial volatility.

And the risk from continued unemployment in America on trade, confidence and volatility?

Meanwhile credit derivatives resurface as a destabilizer, instead of the promised stabilizer.

The Fed’s move may pale next to the agreement by the 16 euro nations to offer financial assistance worth as much as 750 billion euros ($971 billion) to countries under attack from speculators.

The tool of speculators, naked credit derivatives, is not reigned in by financial reform. Shadow bankers, high frequency trading and dark pools garner a virtual free pass under the Dodd bill.

Europe's meltdown and the Dow's 1,000 point free fall point to huge holes in financial reform. President Obama can't get a break on the news. Slime continues to spread.