While Mexican swine flu is being used to fill newspaper headlines, one is forced to search hard to find the real stories that are being hidden away in the background. Governments are still peddling hard to try to stop the financial crisis from engulfing the ‘system’. In the US, Paulson and Bernanke are in court defending their actions in the takeover of Bank Of America. In Europe who on earth knows what is going on, as little of any significance gets reported.
We are told, however, by Reuters that last week Eurozone Central Banks found it necessary to part company with 16 billion euros of reserves. That’s nearly 1% of their total reserves going west in a week. If that rate is maintained for a year, the effect will be to reduce reserves by about 50% – getting close to Euros 1 trillion in a year. With no war being fought, this is a colossal figure to explain away.
ECB says gold reserves down by 823 mln euros on wk
FRANKFURT, April 28 (Reuters) – Gold and gold receivables held by euro zone central banks fell by 823 million euros ($1.1 billion) to 240.84 billion euros in the week ending April 24, the European Central Bank said on Tuesday.
Net foreign exchange reserves in the Eurosystem of central banks fell by 11.8 billion euros to 265.4 billion euros, the ECB said in its regular weekly consolidated financial statement.
Gold holdings fell because of sales by two euro zone central banks, consistent with the 2004 Central Bank Gold Agreement, the ECB said.
It added its balance sheet had decreased in size by over 16 billion euros in the last week to 1.824 trillion euros.
For details of the report, please see the website: http://www.ecb.int/press
If this rate of spend from reserves is continued, the euro might start to catch Mexican chill. Presumably there are also borrowing and tax revenues being spent in addition. Is it possible that in a year or so from now the IMF will be called to bail out the eurozone, raising money from around the globe to do so? I cannot imagine that the Chinese government or others will be too keen on the idea, pouring good money after bad.