For a third time in two years the Fed is opening up its forex swap lines with the ECB to offer dollar liquidity to European banks and institutions that are caught in a dollar squeeze. If this did not happen the dollar could potentially soar as these institutions--and perhaps the ECB itself--would have to enter the Forex markets and buy dollars.
A strong dollar would be good for American consumers, right? It would be good for the Administration, which could point to a rebounding greenback and take political credit for that, right? But no! They're totally clueless as they sit by and allow this to happen without even taking notice.
What are these forex swaps anyway? Very simple: the Fed gives dollars to the ECB in exchange for euros--an unsecured transaction that leaves the Fed with potentially huge forex losses.
The real question is, where is Ron Paul? Peter Schiff? Jim Rogers? And all the other Fed critics? Here's a situation where they really have something to sink their teeth into (the U.S. government is bailing out European financial institutions while Americans go jobless and hungry) and they say nothing. It's really outrageous!!!