This week, the European Central Bank ( ECB ) offered its second long-term refinancing operation (LTRO) to European banks to the tune of a staggering $712.2 billion. First, let’s make one thing clear, dear reader. When the Federal Reserve here in the U.S. instituted QE1 and QE2, the Fed printed money, used this money to buy bonds from U.S. banks, and then took those bonds and placed them on its own (the Fed’s) balance sheet. Money printing is a hot political issue in Europe, especially for Germany. Therefore, what the ECB did (instead of printing money to buy government bonds directly) was to loan European banks money at one-percent interest. The European banks take this money and buy the bonds of the European countries like Portugal and Italy. The bonds are then placed on the balance sheets of the European banks, but the bonds are guaranteed by the ECB. The ECB, therefore, is no different from the Fed. Oh, and where is the ECB getting this money that it loans out to European banks so they can buy the bonds? Well, since no one carries € 529.5 billion ($712.2 billion) with them, I believe the ECB is printing money. Now that that has been established, let’s look closer at this latest development out of the ECB. In December of 2011, when Europe was in extreme duress and European sovereign bonds needed to be purchased, the ECB began the first LTRO operation. It was in the amount of € 489 billion, and the money was handed out to 523 European banks. Once the European banks went out and bought the bonds, things calmed down in Europe, but the question still remained. Are the European banks in a healthy state? Do the European banks have enough money to cover their debts? The answer looks to be “no” by the latest LTRO. The ECB was forced to print even more money: € 529.5 billion this second go-around versus € 489 billion the first time around. What is more startling is that 523 European banks participated in the first round in December. For this latest money-printing handout, 800 European banks are banging on the ECB’s door. There are now more European banks that need money to cover their debts. This means that more European banks need to earn more profit to cover the costs of their debts, and are using the LTRO to obtain those profits. This does not solve the problem of too much debt on the balance sheets of the European banks . This simply buys the European banks time, by providing them with cheap money to get by. So now that the loans have been instituted by …