U.S. banks, with a reported $3 trillion in exposure to European debt, may need massive additional infusions of cash from the Federal Reserve – if that European debt ‘goes bad.’
The Washington Post recently reported (12-22-11): “The European crisis of 2011 and the associated deleveraging of the European global banks will have far reaching implications not only for the eurozone, but also for credit supply conditions in the United States and capital flows to the emerging economies,” Shin [Princeton University economist Hyun Song Shin] wrote in a paper presented at an International Monetary Fund conference in November and which has been widely read among economists.
The vast extent of those European bank obligations to U.S. institutions, or counter-parties, helps explain U.S. policymakers’ anxiety as they watch European leaders try to head off a crisis like the one that followed the Lehman Brothers failure in the United States in 2008.”
This economic rescue plan has been about 18 months in development. The first edition (32 pages long) was originally named, The American Patriot Dividend Plan. That version was submitted, some 18 months ago, to the WSJ, Barrons, Heritage Foundation, World Magazine, and other major media outlets.
The WSJ, Heritage, and World Magazine responded back – encouraging. The Plan received a major re-work / updating – now 18 pages (with the FAQ section). And it has been given a new, name. It will be resubmitted to those same media outlets, along with many, many more in the near future. -Bh