The Buzz Is Growing That World Leaders Will Fire Off A Globally Coordinated Bazooka!

• Yes people, the helicopters are just over the horizon. Global QE implies currency debasement. A global currency crisis is coming! Got physical gold yet?
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  The Buzz Is Growing That World Leaders Will Fire Off A Globally Coordinated  Bazooka! 
  by Simone Foxman, http://www.businessinsider.com/ 
  As we  noted last week, analysts have been tittering over a new potential policy  response to risks associated with a global slowdown—most particularly the crisis  in Europe.
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  World leaders are worried, as evidenced by the conference call between G7  finance ministers and central bankers this morning. And with fears about bank  runs in Spain escalating, some analysts expect some kind of coordinated central  bank action similar to that which we saw announced  last November to lower dollar swap rates between banking systems.
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  That program lowered  the rate at which the Federal Reserve loans dollars out in exchange for  foreign currency and gets them back at the same exchange rate plus interest.  Central banks currently pay 50 basis points above the rate at which U.S. banks  can hedge against currency risk, but lowering this premium could help struggling  banks to meet dollar funding demands.
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  “I think [coordinated action] is a lock, so I would expect they will  announce it at the next opportunity,” Andrew Hofer, Head of Fixed Income at  Brown Brothers Harriman told Business  Insider Monday. And it’s likely that an expansion of the dollar swap program—and not  quantitative easing—would have a much more important effect on the global  economy.
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  “We can deal with unemployment, but at this point we can’t have banks  collapsing in Europe as Lehman  Brothers did in 2008,” said Larry McDonald, author of A Colossal Failure  of Common Sense—The Inside Story of the Collapse At Lehman Brothers and  Senior Director of Credit Sales and Trading at Newedge, in a phone  interview.
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  He continued, “We don’t know if behind the scenes if there’s a struggling  eurozone bank in ‘critical condition.'” I think the Fed expanding swap lines to  the ECB and banks in Europe could happen any time Bernanke sees a bank failing  in Europe. This would be done not to prevent a bank from falling but to control  the spread of systemic risk.”
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  MacDonald added that investors have probably underestimated the impact  of a similar intervention last fall, lumping all the credit on the European  Central Bank’s two 3-year LTROs.
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  Those actions have helped make typical indicators for systemic funding risk  deceivingly low. That’s because they are a composite of lending rates for many  other banks. Take a look at the 3-month EURIBOR—the benchmark rate at which a  sample of banks borrow for a fixed term—which is near 3-year lows:
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