The ECB, Europe's Central Bank, has launched a sovereign bond buying program, arguing for price stability and to make it clear the Euro is here to stay. ECB President Mario Draghi:
It is against this background that the Governing Council today decided on the modalities for undertaking Outright Monetary Transactions (OMTs) in secondary markets for sovereign bonds in the euro area. As we said a month ago, we need to be in the position to safeguard the monetary policy transmission mechanism in all countries of the euro area. We aim to preserve the singleness of our monetary policy and to ensure the proper transmission of our policy stance to the real economy throughout the area. OMTs will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro. Hence, under appropriate conditions, we will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area. Let me repeat what I said last month: we act strictly within our mandate to maintain price stability over the medium term; we act independently in determining monetary policy; and the euro is irreversible.
This is an unlimited, open ended, short term maturity of one to three years, Euro area governments' bonds buy back program. The details are as warranted, dependent upon market conditions and at market value.
Spain today was suddenly imploding. We should say suddenly with a bit of sarcasm, after all, we've been watching Europe put their fingers in the never ending European financial dike for years now.
The German Bundestag voted Thursday to approve the $122 billion banking bailout, but only if the Spanish government accepted full liability for the loans. “There will be no direct bank financing,” said Volker Kauder, head of the Christian Democratic delegation in the Bundestag.
Truth be told this is just another day in the adventures of Eurozone financial crises. U.S. Treasury bonds are hitting record lows as a mass exodus from Europe seeks safe assets.
U.S. Treasuries yields fell to new record lows on Monday as concern that the euro zone's debt crisis is spiraling out of control led investors to seek out the relative safety of U.S. debt.
Germany and U.K. bonds yields are also hitting record lows as the flight to safe haven continues.
Well, it's happened as we earlier said it would. Spain is getting a bail out, worth €100 billion. Guess where that money is going - directly to Spanish banks! The loan is purely to recapitalize the banking system and to be given to Spain's FROB, a financial restructuring fund. From the Eurozone press release:
The Eurogroup has been informed that the Spanish authorities will present a formal request shortly and is willing to respond favourably to such a request.
The financial assistance would be provided by the EFSF/ESM for recapitalisation of financial institutions. The loan will be scaled to provide an effective backstop covering for all possible capital requirements estimated by the diagnostic exercise which the Spanish authorities have commissioned to the external evaluators and the international auditors. The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to EUR 100 billion in total.
The Eurogroup considers that the Fund for Orderly Bank Restructuring (F.R.O.B.), acting as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned. The Spanish government will retain the full responsibility of the financial assistance and will sign the MoU.
Euro zone stocks could plummet up to 50 percent if Greece makes a disorderly exit from the euro zone.
Additionally it was proclaimed bank runs have started in Europe.
A bank run is now happening within the eurozone. So far it has been relatively slow and prolonged, but it is a run nonetheless. And last week, it showed signs of accelerating sharply, in a way which demands an urgent response from policy-makers.
Now investors are worried about the contagion effect a Greek exit from the euro zone could have on savers in other countries.
"Preventing bank runs in Italy, Spain and Portugal should be the top priority," said Berenberg Bank economist Holger Schmieding. "Policymakers need to make sure that the potential Greek precedent of a forced conversion of domestic euro deposits into a weak new currency would not spark a run on banks ... elsewhere."
The ECB is pressing the euro zone to set up a fund that would prevent this dangerous ripple effect, a message reinforced by ECB policymaker Joerg Asmussen last week.
It's a 4E. The never ending European Economic Mount Vesuvius has erupted again, threatening that final pyroclastic flow to the global economy. Friday the 13th has arrived and the horror show slasher is Standards and Poors. S&P doesn't like what Europe's leaders have done about the financial crisis.
To wit, S&P just downgraded the European bail out fund. The European Financial Stability Facility was just downgraded from AAA to AA+. This affects the EFSF's ability to raise cheap funds to help contain the financial crisis. S&P what are you thinkin'?
Last Friday France was downgraded from AAA to AA+ and given a negative outlook. Austria was spanked too and lost their AAA credit rating from S&P. One again Debbie Downer Standard and Poor's is on a credit ratings downgrade rampage.
Austria is now AA+. Italy was downgraded to BBB+. Portugal was downgraded to junk, BB. Spain gets an A and Cyprus I guess gets a beggin' cup at this point. Their S&P rating is now between junk and BB+.
The big picture downgrades from S&P's press release:
It's Friday Night! Well, actually it's not, but this documentary was just released. In keeping with our series on economic documentaries let's just pretend it is Friday. So, Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
In the middle of the night, the Federal Reserve moved to make it cheaper to swap Euros for dollars, in a coordinated move with Switzerland, Canada, England, the European Central Bank and Japan.
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system.
This is supposed to stem a global liquidity crunch. In other words, to prop up the Euro's value.
These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.
More interesting the Central banks are offering swaps in multi-currency denominations:
All sorts of warnings, hints and implications thereof are hitting the news on Europe. Watch out for your hair standing up on end. Here is a round up of the latest.
Pulling Old Currency Trading Gear Out of the Basement
Europe is imploding. Today S&P cut Belgium's credit rating to AA:
S&P projects Belgium will end 2011 with general government debt at around 93% of gross domestic product in net terms, and at around 97% of GDP in gross terms.
Italian bond yields hit 7.8% and that's a 14 year high for borrowing costs and a doubling in a matter of days. Unlike the Fed, Italy cannot print up more Euros either to take care of their problem.
The Italian Treasury paid 6.504 percent to auction 8 billion euros ($10.6 billion) of the debt, almost twice the 3.535 percent a month ago and the highest since August 1997. Italy’s two-year bonds yielded a euro-era record 7.83 percent, almost 50 basis points more than 10-year notes.
Yesterday Moody's cut Hungary to junk status. Junk means not ready for prime time, or investment.
The ECB, Europe's Central Bank, has 
Spain today was suddenly imploding. We should say suddenly with a bit of sarcasm, after all, we've been watching Europe put their fingers in the never ending European financial dike for years now.
Last Friday we saw 
It's a 4E. The never ending European Economic Mount Vesuvius has erupted again, threatening that final pyroclastic flow to the global economy. Friday the 13th has arrived and the horror show slasher is Standards and Poors. S&P doesn't like what Europe's leaders have done about the financial crisis. 
It's Friday Night! Well, actually it's not, but this documentary was just released. In keeping with our series on economic documentaries let's just pretend it is Friday. So, Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
All sorts of warnings, hints and implications thereof are hitting the news on Europe. Watch out for your hair standing up on end. Here is a round up of the latest.
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