The European Central Bank announced Tuesday an unprecedented move to offer unlimited short term money to any European bank at the lowest possible rates. The demand by banks, of 348 billion Euro, exceeded the €260 billion they expected to lend over two weeks, by mid afternoon. This is the largest single money injection by the ECB in history.
Parallel to the ECB's idiocy the Fed has started the first of a series of "universal" money auctions, where all banks can participate and borrow anonymously, for an amount of $20 billion, against any collateral, for two week terms.
Last week's $100 billion dollar injection announced by five central banks was judged by financial markets as "too little". The international bailout plan was the fourth of a series of attempted international bailout efforts in the last several weeks, all of which have now failed.
The latest plan is merely designed to take the lowest ranking junk on the books of banks, off the market. If Central Banks didn't purchase these "assets" they would be offered on the open market, establishing market prices well below their fictitious book values, triggering a wave of write-downs, sell-offs, and bank busts.
But contrary to the bankers' desires, only addressing and rectifying the cause of the problem will change anything. In the last couple of days numerous leading financial commentators have begun to recognise that injecting liquidity will not work, as the crisis is not one of liquidity but of solvency.
The collapse of Australia's Centro Properties Group is a small part of a crisis of solvency of the entire global financial system. In reality we are six months into the greatest financial crash in modern history; LaRouche called it in his July 25th 2007 webcast when he announced that that the global financial system itself had collapsed and that the whole system, including the banking system, was insolvent. Everything since then is the outcome of that reality. It is now time to introduce real solutions, beginning with the only firewall which will protect the people and the function of banks—the Homeowners and Bank Protection Act, which has been drafted for introduction into the Australian parliament. Sign the Homeowners and Bank Protection Bill petition here.
LaRouche will address these issues in his next webcast on January 18, 2008.
For more information see www.cecaust.com.au.
To have a complimentary copy of our international journal, EIR, with more on the financial crash, and copies of our Homeowners/Bank Protection Act flyer mailed to you, click here.
