TARP Two

[tw]

When the wealthy play money games, then economics takes revenge on everyone - especially the least wealthy. The wealthy and other cheats played money games to enrich themselves in Greece and Italy. But with a Euro, every Eurodollar nation must be punished four and ten years later. It was always how economics works.

So why would Greece or Italy withdraw from the Euro as so many wrote? They won't. Why would they want economics to inflict pain on them? By remaining on a Eurodollar, Germans, Dutch, Belgians, and Frenchmen must incur much of the pain.

Was the Euro at risk? Only among those who never learned well proven economics. Neither Germany nor France wants to go back to the Mark or Franc. For a long list of reasons including massive costs. The Euro was never at risk despite so many who only heard headlines based in fear.

However the Euro has a major problem. Bean counters in Europe were using the same American money games to enrich themselves. European banks (to a lesser amount) had invented assets using SIV, CDO, etc techniques. For each Eurodollar asset, these bean counters had invented maybe another four fictitious Eurodollars; paper assets. As economics took revenge, these finance houses had been selling bonds, selling assets, etc to meet principle requirements. Suddenly, reality took hold in Europe. Too many spread sheets did exactly what is encouraged in business schools. Too many spread sheets lie. Suddenly nobody will loan money because nobody can trust the spread sheets. The realization was sudden when doubts were asked about the Central European Bank.

Sound familiar?

America solved this problem with the only alternative. America pumped massive liquidity into finance markets to enable loans and to avert fear. Those who used ego rather than admit to being evil (ie Merrill Lynch, Lehman Bros) went bankrupt. That fear should have existed back in the early 2000 when extremists were advocating fraud in the name of deregulation. And when Harvey Pitts all but protected fraud. Fear covered up using spread sheet games.

We just saw major banks including the US Fed, Bank of Canada, Swiss National Bank, the Brits, etc - virtually everyone - do a massive TARP for Europe. Because some nations (Greece, Italy, etc) have openly lied in the name of money games.

Philadelphia Gas Works once did a same money game. PGW floated a 20 year bond issue to pay for vehicles with a 3 year life expectancy. Because finance people are so corrupt, Wall Street said that was good. These games also exist in nations such as Italy where fraud was openly encouraged by Berlusconi. As if anyone but the least educated Italians thought he was honest.

We know the Euro was never at risk. But the Euro's exchange value was at major risk. Everyone suddenly realized lying on other's spread sheets was as routine as the lies on their own. This latest TARP was the only way to solve a major cash flow problem created because finance people cannot be trusted; must be heavily regulated. Because these people are so corrupt as to foolishly think the purpose of a company is profits.

The Euro was only going to disappear in stories that ignored hard facts. But many did not see what happened. A worldwide TARP for Europe for the same reason TARP was necessary to avert another 1929 in America.