Cullen Roche on Europe Swaps, the Fed vote and potential US taxpayer losses

"...the biggest news surrounding the swaps
is the dissenting vote by Jeffrey Lacker.

He said the loans are equivalent to fiscal policy
and do not fall under the jurisdiction of the Fed.

...The swaps expose the US government
to potentially substantial foreign denominated debt.

From an MMT position, this is an absolute no-no.

The loans are essentially unsecured
since they’re denominated in a foreign currency
so if the Euro vaporized tomorrow
the Fed could be on the hook for the losses.

This is an entirely irresponsible risk.

...The announced program is a change to current programs
and not the unleashing of some new bazooka.

...this program does nothing
to help solve budget woes in the periphery of Europe.

...we might look back at the swap lines
as a futile announcement
as a credit crisis erupts across Europe."

Cullen