21.09.11 – 14:36
The European Union wants to prevent panic using publicity
Khazin Mikhail Leonidovich
I must state an important way-out for present day economical situation, decision on default of Greece is most likely to be made. So, it will come soon.
One of the most important latest news has been information that the world’s five largest financial regulators – Eurocentrobank, FRS USA, centrobanks of Great Britain, Japan and Switzerland have announced coordination actions to pour dollars into bank system. They are supposed to hold three operations to provide dollar liquidity for about three months till the end of this year.
But will be this activity effective? Most of experts have their doubts about it. It can’t solve Greece debt problems or problems of actives’ losses in case of its default.
But why so violent measures are necessary? There are great amount of money in the US banks, and total volume of means will hardly change for three years. Liquidity’s problems are supposed to appear in future, besides in near time and then there may be need in pouring money into economy. Aggregate demand is falling; repayment of loans is worsening and financial storm is just strengthening. May printing press turning on full be preparation for Greece bankruptcy? If it happens, banks, the largest holders of the country’s duties will have liquidity’s problems automatically.
We shouldn’t forget that modern financial system is living because of insider information. It means that many prominent clients of these banks will start taking their money out long before default will be. And, as we see, it will not add additional fortune to these financial institutions.
It is clear that the European Union’s rich authorities are realizing perfectly all these problems; they don’t need to be oracles to foresee uneasy times ahead! And it is not a surprise that they are taking adequate measures which will not be ever known. The one problem is panic of depositors during the operation. Theoretically, such panic can strengthen scale of troubles and can cause colossal money’s outflow from banks and bankruptcy. As a result scales of measures may not be enough. So, panic must be taken into account, besides, it is necessary to act maximally in public because it will just prevent it.
It seems to me, such an account makes the officials of the five leading centrobanks of the world to inform public about the prepared operation, not just pour money into bank system. All potential alarmists must be warned that panic attempts (urgent taking out of their money) will bring losses while banks can’t suffer because bright people have taken arrangements beforehand.
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