(BN) Finland Must Clarify Bailouts to Lawmakers, Audit Committee Says

Posted by on Nov 10, 2011 in Uncategorized | No Comments

I think this is an interesting story. Finland was the first to demand “collateral” for continuing to play the bailout game. It is debatable whether they are getting good collateral or not, but it looks like they are the first government to really focus on what all the guarantees and other commitments may cost them. Notice the paragraph referencing central bank activity.

Finland is a small AAA country, but is clearly interested in maintaining their AAA. France is at the other extreme. Germany seems torn of what they want to do – prudence vs all-in seems to change daily. The Dutch seem to be expressing more concerns again, and may follow the lead of Finland. I suspect that if the Finns really dig into what the exposures might mean and how reckless and cavalier other leaders are being with their money, they will get more concerned rather than less concerned. It is a development worth watching.

Maybe there can be big Euro with lots to lose countries, weak Euro who already spent it all countries, and conservative euro countries?

Stocks have been overly optimistic on what the ECB will deliver. The SMP was fully expected (surprised they didn’t do more yesterday, but the ECB members may have been busy scheduling a summit, or seeing if their country was ripe for installing themselves as puppets).

More bond purchases are highly likely, printing rather than sterilization would have to occur, but I don’t think Germany is going to give in because the SPX dropped 4% in a day to be down not even 2% on the week, and still up close to 20% from the lows. We (the stock market) really aren’t that important, especially to the Europeans – who seems to move slower than Ben and have less faith in the wealth effect transmission method Ben loves so dearly.

Finland Must Clarify Bailouts to Lawmakers, Audit Committee Says
2011-11-10 12:34:48.220 GMT
By Kati Pohjanpalo
Nov. 10 (Bloomberg) — Finland’s government must explain to
lawmakers the risks and liabilities it incurs from helping
indebted countries and guarantees it makes to the temporary
bailout fund, the parliament’s Audit Committee said in an e-
mailed statement today.
The government must explain the impact of guarantees to the
European Financial Stability Facility on AAA rated countries and
clarify whether the guarantees include interest and expenses,
the committee said.
It also urged the Bank of Finland to provide lawmakers with
information on the risks and liabilities incurred by the state
in consequence of operations by the central bank and the
European system of central banks.
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