The International Monetary Fund (IMF) is lending Greece about piece $286 billion. Since the United States is "required" to contribute 17% of the IMF's funding, this means that you, Mr. and Mrs. Taxpayer, have just been hit for $48.6 billion to cover Greece's debts. In other words, the solution to a debt crisis is to pile on more debt at your expense, Mr. and Mrs. Taxpayer.
But, it even gets better for Mr. and Mrs. Taxpayer. The Federal Reserve System's "swaplines" have been reopened, which could conceivably pay for part or all of the European Central Bank foreign bond buying of up to $1 trillion. The Fed said that these facilities are designed to help improve liquidity conditions in U.S. dollar funding markets. (Wait a minute! The dollar is not under pressure. It is the Euro.) The arrangement with the ECB will provide them with the capacity to conduct tenders of U.S. dollars fro the Euro at fixed rates. And get this, these swap arrangements have been authorized through January 2011.
The DJIA in pre-market trading is up close to 400 points. Wow! The markets are loving it. That's right. Just pile on more and more debt. Its gotta work, right? My investment strategy has not changed from yesterday. I will liquidate 60% of my SPY positions and start to redeploy the investment proceeds into the following ultra-short ETFs (DXD, SDS, and TWM).
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