This is true, but even more reason for American banks to avoid attacking America too hard and for American rating agencies to avoid helping, willing or inadvertently, hedge investors in such attacks. Also, some big banks and funds actually attack whole states and their bonds, I guess they prepare in advance their portfolios to maximize profits and minimize losses from the operations, because they wouldn't shoot themselves in the foot, and they obviously don't care if others lose from them.

BTW I found the origin of the latest criticism against the ECB: it's going to help banks with a giant loan of more than 480 billion Euros at a ridiculous 1% interest rate, that's considered poking fun at averyone else, from states to private citizens, that are strangled by interests far higher when they borrow money, particularly from the banks. Almost everybody is sure that banks will keep on charging very high interests on loans, blaming the stuation, despite this big loan they received, that at such a low interest rate is almost a gift, no, actually IT IS a gift, because the profits they'll make lending that money is far higher than if they had to collect it elsewhere, while ECB will lose from the loan, as the interest rate is lower than inflation rate. Rescuing the banks was maybe necessary, but charging an interest equal to inflation rate, not lower, would have already been a help big enough, and already more than what anybody else, including states in trouble, could hope for.

http://www.globaltvbc.com/money/ecb+lends+europes+banks+a+massive+%E2%82%AC489+billion+over+unprecedented+3-year+period/6442546373/story.html

http://www.thehawkeye.com/story/BC-EU--Europe-Financial-Crisis-7th-Ld-Writethru

In one or both articles, there's also the origin of my first misunderstanding: some economists suggest ECB become the lender of last resort to European governments, while the ECB president opposes the idea.

Instead, a EU separate 700 billion Euros fund, the ESM, will be raised as lender of last resort, and Italy must contribute with more than 120 billions. But many are deeply worried by some excessive powers this fund will have: http://en.wikipedia.org/wiki/European_Stability_Mechanism#Critics

Yeah okay sure, what a pathetic study. Did they take into account social assistance? A janitor is more likely going to need welfare/unemployment if he gets fired, laid off or injured on the job, plus they pay very low taxes since they are in a low tax bracket.

I guess the study didn't take into account how much tax the bankers pay and how little social assistance they are eligible for. Also since they make more money they spend more, thus they are helping other businesses, and paying sales taxes on their purchases. Plus they are more likely to buy new products since they are upper class where as a janitor with a lower income would be more inclined to buy used/secondhand goods to save money, which he wouldn't pay taxes on. 

Geez this study is just such a joke, I honestly hate left wing bullshit like this. Bankers provide a service just like everyone else, nobody forces you to take loans or make investments but the option is there and bankers are there to help. 

I used to reply to posts with demotivational pictures...then I took an arrow in the knee

lol. what do you think of my new avatar. it's TV. snow lol.

Banks do not attack countries at all.  Not sure where your getting that from.

This is a global economy we're talking about here.

As for the ECB not wanting to be a lender of last resort to Europeon governmets.  It's not that Draghi doesn't want to be that.  It's that they CAN'T be that as that is not within the the ECB's charter.  They don't have the authority to do so. 

Mainly because Germany didn't want the ECB to become a credit account that irresponsible countries could run up without having to get money through political decisions.

As for the 1% rate being too low... I'm not reading anyone upset with that interest rate, and if you read your source you'll note the rate before that was 1.5%.

The money is being loaned to banks, because banks don't want to loan money to each other because of eurodebt contagin.  That money is then lent to other people.   Charging a higher interst rate would mean the banks would have to charge you a higher interest rate.

The money is being lent specifically so it can be lent out to others at a higher rate so the credit market doesn't freeze up.

About the impression of banks attacking states: massive short selling of bonds when the emitter states are weaker; and in at least one case, the vicious circle of loans at growing interests to pay previous interests that sunk Argentina, if they didn't want to sink it, they should have given it some relief stopping that vicious circle, obviously asking in return some urgent measures to stabilize the balance.

About the rest, you know the matter and I guess you're right, but if even some economists react that way, common people will prefer to follow them, because they are just as angry towards banks as they are towards governments. Anyway, if thanks to that loan banks will concede more favourable loans to their clients, then we'll be able to say it worked, and let's hope so, but we still have to see.

If you think Short selling government bonds hurt the government... I'd suggest looking up what shortselling is... it's often used scapegoat by people who don't really know anything about economics, but studies consistantly hold up that short selling doesn't effect market volitility at all.

People shortsell stocks and bonds that are doing poorly, specifically because they are doing poorly.

AS for Argentina.  Your suggesting that banks, who were going to lose massive amounts of money due to argentina's poor management.  Should be giving Argentina more money, and putting themselves, and more importantly... their custoemers money at risk, by offering the Argentine government cheap loans on the hopes that they change?

This is EXACTLY why the ECB isn't a lender of last resort to governments. (Well not exactly, since Argentina is in south america but...)

That's like saying that you should lend to your your friend who owes you a couple hundred dollars, until you go bankrupt because otherwise you can't get back that couple hundred dollars.  It's stupid.

Or like people who put $20 in a slot machine, then spend another $300 chasing that 20 bucks.