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US – This is Where the Money IS !!!!!

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Absolutely brilliant interactive chart on ZeroHedge of where all the money in the US is in 2011. It outlines;

What billionaires own, household incomes, state & federal taxes, federal spending, federal budget, disasters, foreign aid, the list goes on and on. I highly recommend taking a look.

You should be able to get the direct link at:

http://xkcd.com/980/huge/#x=-2520&y=-1448&z=4

On top left you can enlarge it to see different sections.

 

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Is Austria to be Downgraded Shortly?

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As Hungary requested help over the weekend from IMF and EU, is Austria close behind? Austria was heavily exposed to Eastern European loans. In an article with ZeroHedge, there is an ad from Austrian bank, Raiffeisen Bank in which explains that Austrian bank supervisors were today told to limit their lending to Eastern Europe.

Austrian bank supervisors have instructed the country’s banks to limit future lending in their east European subsidiaries, a further sign of the potential knock-on effects of the eurozone crisis for economies around the world.

The restrictions come as Austrian officials seek to defend the country’s AAA credit rating, amid concerns that the government might have to bail out its banks because of losses in central and eastern Europe, where they are the biggest lenders, and their exposure to Italy.

The moves by Austria, which appear to be unilateral, show how even the eurozone’s strongest economies are feeling the pressure of the sovereign debt crisis.

 
as quoted from Reuters

The three banks’ CEE exposure exceeds Austrian GDP, raising concerns that the government would be unable to bail them out if their loan portfolios turned sour. The announcement came just as the spreads of Austrian bond yields over German Bunds rose to record highs and was also designed to calm market jitters, a central bank official said.

PIIGS Debt/GDP chart of 2010

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Below is chart of PIIGS debt/GDP figures from the Telegraph.

No not EuroBonds, They Are Stability Bonds

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So for the hard sell to the German public, we will refer to them as Stability Bonds. Yeah that will make all the difference 😉

A cunning ruse from EU Commisioner Olli Rehn– to try and win round a sceptical German public, he has renamed “eurobonds” – debt which would be issued jointly by all 17 nations using the euro rather than by Greece, Germany etc individually – as …

… “stability bonds”.

The European Commission is very keen on the jointly-issued bonds as a way of drawing a line under the eurozone debt crisis – because more heavily indebted nations would be able to borrow under the cloak of strong nations.

However Germany is opposed to the idea, for exactly that reason.

Jean-Claude Juncker, head of the group of eurozone finance ministers, obviously didn’t get the memo from Olli Rehn (see post below) about the name change to “stability bonds” but he had a stab at selling them anyway.

One Massive Circle Jerk: Presenting The Scam That Is ECB Bond Purchase “Sterilization”

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As uniquely 😉 explained by ZeroHedge how the ECB monetizes sterilizes.

When discussing European sovereign bond purchases it is never polite to say the ECB “monetizes” when talking to “very serious people” –  after all they “sterilize”, or in other words, don’t see an actual balance sheet expansion, as they offload the entire cumulative balance (which as of this week was €194.5 billion) onto other financial institutions. In this way, the bank supposedly does not take on interest rate risk, which in a feedback loop, is the cause and event of such modestly unpleasant monetary expansion episodes as the Weimar republic. What few discuss, however, is just where the banks get the money to actually buy bonds from the ECB. Well, as it turns out, all the money used for sterilization comes from, you guessed it, the ECB, in what is one massive several hundred billion circle jerk. In essence what the ECB does, by pretending to not monetize and pretending to sterilize, is taking on not only interest rate risk one level removed, but also bank solvency and liquidity risk! In turn, this makes the central bank even more undercapitalized in practice than it is (and at 50+ leverage, it is already pretty, pretty undercapitalized), as once the banking dominos start crumbling, it will be the ECB that is left on the hook… and thus the Fed and the US taxpayer. So perhaps while Germany is complaining every single day about the possibility of outright money printing by the ECB, it will be wise to ask itself: who is giving Europe’s insolvent banks, which just borrowed a record amount of short-term cash from the ECB to be recycled precisely into such indirect monetization, their cash?

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