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It takes longer in some cases to get approved for a
loan…and that is assuming you have an excellent credit rating. Yet,
Central Banks around the world were able to make an historical coordinated
plan to save the world from the brink of financial destruction in just 10
days? My mother always told me … when you rush things the end result is
always sloppy and bad. This has proven true so far since the collapse of
2008. Every rushed decision made to stave off bleeding or further collapse
has, in hindsight, turned out to be worse than just letting the system purge
itself. Why then should anyone be so euphoric over the Coordinated Central
Bank scheme to stave off financial Armageddon?
Reuters published the story today. Ten days of secret planning to
rescue markets.
(Reuters) - Britain orchestrated this week's bold
move by central banks to stave off a cash crunch in global markets, helping
drive a plan that began to take shape around 10 days ago.
Bank of England Governor Mervyn
King said he called the meetings that led to the decision by six of the
world's major central banks to cut dollar funding rates to keep money flowing
through the world's financial arteries.
"It was the result of conversations which I
initiated as chairman of what used to be known as the G10 governors, now the
economic consultative committee, among a limited number of central
banks," he told a news conference in London on Thursday.
The decision by the U.S. Federal Reserve, the
European Central Bank and the central banks of Japan, Canada, Britain and Switzerland to provide cheaper dollar funding
for banks eased credit strains and provided a fillip to market sentiment.
Short-term funding costs eased on Thursday for the
first time since July 22, when the latest phase of the euro-zone crisis took
hold after European Union leaders failed to lay out detailed plans for a
strong bailout fund.
Several banking officials said there was no specific
trigger for the action, and specifically denied rumors that a European bank
was on the brink of collapse. Instead, they characterized the action as the
culmination of many weeks of worry as financial strains had built.
"Non-Europeans are not just complaining about
the lack of action by Europeans but starting to feel more strongly that
Europe can't contain this problem by itself," said a source briefed on
the central bank discussions. "That sense might have led to this swap
deal."
Even emerging markets, notably Eastern Europe and
Asia, were feeling the pinch as European banks pulled back lending operations
and put assets on the block, two banking officials said. Local banks that
took up the slack had less access to dollar funding for their clients, bank
officials said.
In the announcement, the six central banks said they
also were ready to make money available in currencies other than their own,
if necessary.
There aren’t telling us the bigger story or
releasing details about the garbage resting underneath the surface. The mere
mention of making funds available in other currencies other than their own if
necessary and the mention or shooting down of a rumour
of a major institution on the verge of collapse was also concerning.
Those Central Banks better get their toner and ink
orders in quickly because the rate of withdrawals, (people pulling their
money out of European banks) is accelerating and pretty soon those banks are
going to come knocking for cash infusions. Who said the crisis was averted?
Ladies and gets, the crisis is simply taking an intermission break.
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