U.K.: cash injections for RBS, HBOS, Lloyds TSB
Submitted by
CalculatedRisk on Sun, 10/12/2008 - 10:42pm (209 comments)
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No way...
second!
And they'rrrrr racing...to the bottom
stop it - I need to get some sleep!
Does this mean cheaper scotch? Lefty?
We have lift off ...
German DAX 30 futures up 6.7%
French CAC 40 futures up 6.2%
Not really a surprise.
Best to all.
Dang it. I know I've got some Continentals lying around somewhere.
"maintain the availability of competitively-priced lending to homeowners"
blowing air in a balloon full of holes...
I can't see this pumping up the Housing market the way it's supposed to, and since England, like the US, produces nothing tangible anymore, I am now counting the days until Lloyd's goes under. I pulled my account from RBS two weeks ago.
OT. If LIBOR has been turned into a stun gun, then the national distribution of the $150 trillion in LIBOR based financial instruments seems key to understanding the dynamics. Anyone know a source for information?
Well, I'd love to unload some more of my longs in a nice rally! (After dumping my shorts last week.)
Unfortunatly I don't think I'll be playing the ultrashorts anymore, since they are using swaps and counterparty risk is insured by UBS. IMHO the risk/reward isn't worth it anymore.
"It's also requiring banks to maintain the availability of competitively-priced lending to homeowners and has the right to appoint new independent non-executive directors."
Is this gonna be a bunch of Neel Kashkari's with British/Scottish accents?
I think we will need to watch "Snatch" in the very near term.
When Paulson was pitching his con, the comments were flying with things like 'peeing on a forrest fire,' 'we want equity,' etc.
Now those things are being done in earnest, or at least being proposed with seriousness, and still we moan?
I'm missing something. (No surprise here.) What would be good news given where we are - a time machine rolled out of Area 51?
Eureka! Air pumps for houses, just like for those little state fair bouncy things.
Tough love vs. Moral Hazard
http://www.financialpost.com/news/story.html?id=874251
I know he's dead but bring back Mello
Russian billionaires feeling the pinch... awwww
http://www.financialpost.com/news/story.html?id=874242
Wow, this is like Christmas. Can't wait to see what stocks look like in the morning. I'm so glad I'm long the UYG!
Even if every damned bank on the planet was fully nationalized, what difference does it make? The credit bubble popped, and all that remains in its wake is debt.
A hundred trillion in quasi-money is gone.
So what if the banks are fully capitalized? Does that make the quasi-money come back? NO. Does it make new credit appear? Apparently that is what the CB's vainly hope will happen.
Don't they realize, it took decades of institutional ingenuity to inflate that bubble, the biggest in human history.
And they suppose they can replace it in a couple of weeks? Dreamers!
"3 banks...total 37 billion pounds ($63 billion)."
So, does anyone know what sort of write-down a $63B equity injection would allow these banks to weather? In other words, does this injection take care of the worst case scenario, the likeliest scenario, or some other scenario (like the US Treasurys "we need a big number, but not too big, let's pick $700B as a number scenario)?
Even if every damned bank on the planet was fully nationalized, what difference does it make?
unirealist | 10.13.08 - 3:04 am
Apart from the fact that recapitalisation/nationalisation is only one element of this deal, the difference is that governments can now effectively tell banks "though shalt resume lending", this avoiding the real sector from being strangled to death. So the difference is that we get a chance of avoiding - or at least mitigating - The Greater Depression v. 2. Is that good enough for your?
Stop pissing on the best approah that has yet been proposed. And if you have a better idea, please put it forward.
How can I observe this and come away with confidence in the currency I hold? I see these injections and huge bailout programs which introduce vast sums of money into the system and bestow them upon people and entities that did nothing to deserve them.
I'm sure that any currency will hit a critical mass point, where enough of it is bestowed upon economic "leeches" who add no value that it is just worthless as a representation of value or labor, and thus not viable as a medium of exchange.
When dollars are granted to people who did no work and added no value, then their status as a medium of exchange is questionable.
Does a monetary system, or medium of currency, have any integrity at all, or any value as a medium of exchange, if currency is just given to people who put no "work" into the economic system to deserve these notes? A dollar is worth something to me because people who hold them earned them by, say, cobbling shoes.
This "British Plan" is basically just following what Belgium did for Fortis and Dexia more than two weeks ago. The only difference is the Belgium got more seats on the board. But I guess headlines saying "Belgium saved the world" would just not fly. That would kill "The Euro is about to collapse" meme being pushed so eagerly by Anglo-Saxon propaganda outlets.
Currently Smoking Cannabis writes:
"What would be good news given where we are - a time machine rolled out of Area 51?"
Let me try:
Hank Paulson's Mom: Concise and very helpful. That's why the non-experts love this blog. Thanks.
Sorry for the long comment; I just don't see how I can watch these things going on and have any faith in the integrity of the currency of my country. This seems to me to spell an inevitable devaluation or hyperinflation.
"underwater players get flushed out, and the above water players flourish."
One more point, you are not going to get anywhere near the economic levels we had during 2006, unless you start giving away absurdly free credit to consumers (again). Even though it is a feasible approach, as we have witnessed, that approach does have its limits and unintended consequences.
Don't they realize, it took decades of institutional ingenuity to inflate that bubble, the biggest in human history.
Haha. All of the data inputs for the models have just been pooped on.
This upcoming free lunch ought to taste great. It will also be less filling.
Where did I get this?
Libor, set by 16 banks in a daily survey by the British Bankers' Association at about noon in London, determines rates on $360 trillion of financial products worldwide, from home loans to derivatives.
I'm listening to Alastair Downing on BBC Radio 4 at the moment. He said the RBS stake would amount to 60%.
Link here: http://news.bbc.co.uk/2/hi/business/7666570.stm
How on earth can bank nationalization be considered bullish?
This "rescue" and supposed market turnaround seems to have killed the USD run.
Get your metals soon.
Wanderer writes:
How on earth can bank nationalization be considered bullish?
Wanderer | 10.13.08 - 3:25 am |
You obviously don't tune into CNBC.
We are all the State Bank of India now.
Nice legacy W is going to be leaving Obama:
If I were Obama I'd question whether or not I really want to be president.
The question is, does any of this Sunday bailout panic stuff impact J6P and will J6P ignore all this and go out to buy new tools to toss in that new SUV and go build new homes?
"£20 is being invested in RBS. £17 in HBOS and Lloyds (the merger is essentially being forced at this point). It sounds like the U.K. will own 43% of Lloyds-HBOS. I haven't heard the percentage in RBS."
£17 for 43% of Lloyds-HBOS. In total? I personally will offer £21 for 50% of RBS. I'll even go to £200, if only to forfeit the superannuation funds and sell the buildings.
More seriously, @ Carlomano, why are you so apparently delighted to see the risks and costs transferred to taxpayers? If these banksters were threatened with investigation and jail instead of a bail-out, they would lend soon enough.
So:
Step 1: Drop the market 45% and scare the bejeebies out of everyone who can read over the age of 25.
Step 2: Rescue the market, and it goes up 82% to take out last October's high, all by Election Day.
Step 3: The country is overwhelmed by the brilliance of our Treasury secretary and his political party, and they elect McCain out of sheer relief.
Step 4: The stock market plunges by 85%, everyone is left impoverished, and the neo-cons declare martial law, shut down Congress, and cancel all future elections.
Is that sufficiently paranoid?
Jim, I'm a little suspicious about the plausibility of step 2, but other than that, looks reasonable!
DKWH
Three wars, if our favorite tin hatter Oliver Stone is correct (as seen the other night on Maher.)
Don't forget the amorphous "war on terror." Wish I could find the link on the difference between anxiety and fear. Essentially, fear has an object and since said object can be identified, it can be reasonably planned for. For example, 'we fear the axis powers of WW2'.
However, anxiety has no fixed object. See Orwell's '1984'. With no fixity, there is no ability to reasonably plan against it.
GWB et al have done a superb job in selling anxiety. And hence the drumbeat to the $700B bailout... look at the number of visitors at 1230 in the morning here. Plenty of anxiety, no clear ability to discern how to fix this mess.
From a previous thread, I ask again - can LIBOR be removed as the base index from the ARM's Kona pulled from Conjure's bag? And if so, how would that impact the threatened POA tsunami of resets this year?
I don;t know about any of you, but only hardcore nuts are following this at this point and IMHO the vast majority of people out there, globally will have a great deal of distrust for financial activities. I think capitalism was knocked down here and keeps on fighting, but capitalism could still knocked out by derivatives. The systemic risk for $60 Trillion was never modeled into any of this implosion, and every country around the world is flying blind right now!
"the neo-cons declare martial law, shut down Congress, and cancel all future elections"
I'm pretty sure there'd need to be a bunch of steps just before this. Nationwide martial law also seems a reach, though localized, temporary martial law sounds entirely likely.
How about marital law? There seems to be plenty of shotgun financial wedding lately, why not extend it from WS / Fleet Street to Main Street? I know there are sad singles everywhere who would welcome this gov't mandate.
CSC, you see all those signs on highway offramps in MV and LH advertising for "Single in OC? Go to singles.com". That constituency alone might be enough to tip the scales.
"Der Kommandant Weather Helm writes:
Nice legacy W is going to be leaving Obama:"
Disclaimer: I am not a Bush supporter. Far from it!
However...allow me to put the blame where it belongs...on my fellow Americans, and even in my "world citizen" breatheren.
You know what they did. At all levels (individual consumers all the way up through national governments), they bought goods and services that they could not afford, sold things that could not be afforded, invested money that would not or could not be paid back, promised things that had no funding, and bet on things with no real understanding of the things they were betting on.
Bush's fault? HA!
We all either allowed it to happen, or made it happen ourselves. Even those of us who were sounding the early alarm and had our financial houses in order are not totally blameless. However, those that actively participated in this, well, credit based Ponzi scheme, got us to the end game a whole lot quicker.
Upon reflection, perhaps we should thank them. Maybe it will be easier to raise my children to know that "bling ain't the thing".
I've seen Huckabee on TV twice this weekend suggest that the market declines could be the result of financial terrorism.
I wouldn't be surprised if we get a "terrorist" attack somewhere and a new war start along with canceled elections.
Marshal law won't be needed for a while.
So Barclays is going to stay independent.
Assuming I get the same quote from Barclays and RBS for an interest rate swap, why wouldn't I go with RBS (they are now backed by HM Treasury)?
Exit: I'm more fascinated by the handwritten signs strapped to poles at intersections that read, "Buyers Wanted! Call to buy a foreclosed home!"
Seems like a good way to really plumb the depths for a new round of greater suckers. After they buy my house and send me to Costa Rica, the system can go up in flames and I'd be cool wit dat.
Election in the US are under the control of state governments.
If the Electoral College doesn't meet for whatever reason, the current constituted House will elect the President and Vice President.
Those founding fathers were pretty sharp seeking independence from a Crown that would buy RBS.
CSC - those handwritten signs are part of a seminar-based system. A friend of mine spent $k's on this. Of course it works better in lower rent districts like CO and GA, where houses could be had for the low $200k and below. In the OC, not so much. Depended on sub-prime lending, too. Essentially, buy from desperate sellers and make a spread. Not working so well anymore.
Called "autopilot". Hahahaha. Just set the brick on the lever and jump out the back!
Right. And why would money stay in country's that don't have these sorts of guarentee's going on?
And . . . uhhh . . . wtf is happening in Russia. The last I heard a few days ago was that they shut their stock exchange down . . .
So when do we know if this bailout is going to work. Will LIBOR drop like a rock immediately or will it still take a while?
Exit: Very interesting. I tried to snap a pic of one next to the Tustin Marketplace last week but it didn't come out. Anyone who calls the number on that sign should change their name to Mark.
Hank Paulson's Mom:
I'm with you. I'm not trying to play Obama "fanboy" or anything. I just think it's quite likely he's going to win the election, and the legacy left by W. is what it is.
I agree that this crisis is many years in the making, and comes from the bottom up.
And I think George W. Bush is an absolute nincompoop. A moron. An embarrassment to his country. I can come up with a long list of reasons why almost anybody would have been a better president than that POS.
But a better president would not have dodged this crisis, a better president would have shown leadership, foresight, intelligence, and command. And in all likelihood the severity and cost to taxpayers would have been much smaller.
I don't think Barr, Nader, Obama, or McCain could possibly be a worse president than that arrogant, swaggering, egotistical, and overconfident blowhard drunk we currently call chief.
So put me in jail for heresy or being a traitor or whatever. But W., I'm confident, will be competing in the history books for the Worst Ever President title. We'll just have to wait and see.
Wanderer-
If you think the current operation of the federal government falls within the confines of the constitution and the law then you really haven't been paying attention.
If the elections are suspended our wonderful leaders in congress will be very outspoken about their support for extraordinary measures during times of crisis.
Hank's mom - True enough. Culpability all the way around.
20 years ago I traveled across Africa. Watched 2 and 3 year old children dig through the garbage pits my group dug to dispose of our trash. Received the most heartfelt generosity in the shadow of Mt. Kilimjaro from people owning nothing more than the clothes on their back and the mud walls of their hut, giving me shelter and offering me soup from their meager pot, during a rainstorm. At the equator, heard calls of "bruce lee, bruce lee" (I'm Asian american). Evidently his movies made it as far as impoverished Zaire.
Point is - we're a LONG way from grinding poverty in the US. Even those who lose the houses they "bought". I'm not favorably inclined to Phil Gramm, but his point about "whiners" is, I think, accurate. But will US residents be willing to go back to a world of analog TV, home-brewed coffee, and 7 year old cars?
Or, perhaps more accurately, HOW will we adapt to living standards from the 1960's?
CashOnlyHousing
Alas, you are probably right. I keep forgetting that the we a Scalia/Thomas Supreme Court.
Actually, I lived thru the 60s and did quite well. The standard of living was OK, good schools, nice house, affordable universities and cheap health care.
So when do we know if this bailout is going to work. Will LIBOR drop like a rock immediately or will it still take a while?
Aaron Cooke | 10.13.08 - 3:51 am | #
Go back a couple of threads towards the end (the one with the time clock on it) and find mp's report from Conjure Bag. LIBOR is gamed.
"Marshal Law" - that was a TV show in the early 70s?
This is total shit, SIFMA shuts the market:
The MSCI Asia Pacific excluding Japan Index of regional shares rose 4.5 percent, after last week plunging 20 percent, the biggest drop since the benchmark was first compiled in 1987. Japan's financial markets are shut today for a holiday as are those in the U.S., which prompted the Securities Industry and Financial Markets Association to recommend trading of cash Treasuries be closed today.
"But will US residents be willing to go back to a world of analog TV, home-brewed coffee, and 7 year old cars?"
Analog TV will be hard after February when it's banned from US airwaves.
That said, got a 8yo car and 12yo car, (never bought anything younger than 6) and brew all my coffee at home or work. So "check" on all those.
I don't know if my neighbors want to do this though.
In related news... (NY Times):
"In what could set an important precedent, federal officials assured a big Japanese bank late Sunday that its planned investment in the embattled Wall Street giant Morgan Stanley would be protected...Mitsubishi and the Japanese government pressed the Treasury Department over the weekend to guarantee that if the United States were to inject money into Morgan Stanley at a later time a step the Treasury has ruled out for now the move would not wipe out Mitsubishis investment...Officials from the Treasury Department declined to comment Sunday night..."
12many dopes writes:
"Marshal Law" - that was a TV show in the early 70s?
I thought Marshal law had something to do with Eminem.
Hazard -
No doubt. However, generations of born and bred dopes allowed them(our)selves to believe that planned obsolescense is somehow NOT obscene.
My grandmother, who lived through GD1 in Philly and WW2 in Hong Kong, recycled everything way before it was hip. Even paper towels. Who does that here? Yet her point - stuff that's still functional should be used until done- is mostly lost today.
"Actually, I lived thru the 60s and did quite well. The standard of living was OK, good schools, nice house, affordable universities and cheap health care."
Do I understand correctly that single earner households could still do well in those days? Seems like these days single earner families have a much tougher time.
Marhall McLuha
Kommandant - my point exactly. Analog TV is kaput because, um, why?
I don't own a TV, however, so I personally don't care. Still, high- def pores on the money honey's faces are about more than I care to stomach.
Is no one else watching Gordon Brown's press conference right now?
*** No dividends to be paid by banks being recapitalized by the UK ***
"*** No dividends to be paid by banks being recapitalized by the UK ***"
That should simplify taxes a bit for investors who do DRiPs...
I wouldnt expect martial law anytime soon in the US. For our unitary political elite (that means Democrats and Republicans are working for the same boss for those who still believe in the partisan fairy) there are basically two choices; to rule by coercion, or to play democracy and obtain the consent of the people through moral legitimacy, namely elections.
Coercion is expensive, time consuming, and tends to require exponentially more effort over time to gain the same amount of consent from the population. By far the less expensive and more efficient way to rule is by seeking legitimacy, especially if the political elite control the media. Basically, a combination of the Kabuki Theatre of two-party politics (where both sides are on the same team of course) together with a bread-and-circuses strategy of distraction is the best way to ensure a malleable and compliant population. The US political elite are masters at this and there is no reason to believe they will not follow success with even more success in this endeavour.
My grandmother, who lived through GD1 in Philly and WW2 in Hong Kong, recycled everything way before it was hip. Even paper towels.
O.K.--I'll bite.
How do you recycle a paper towel?
*** Further Press Conference updates (they move really slowly over in England)
Kommandant - big differences these day IMO are the internet, 500 TV chanels, crap food, fundies (they were always around but just kept their mouth shut for fear of ridicule), crummy schools (bad then also but at least some discipline, none of this psycho-babble).
And POS weak cars, these things are jokes compared to what I drove back then (or, at least, the cars my father owned). Not great on mileage but then gas was sooo cheap.
Oh and of course they make it seem like a ho-hum deal,
Investing at the market bottom for a good return, we must dish out £400bn so that the small business person get a loan and the hardworking labourer can get a mortgage to buy a house . . .
Good question "Do you know what your getting into? To what extent are there further toxic shocks in the pipeline to weaken your 'investments' further"
A: "Banks must be strong to deal with that, so we are making them stronger" ... sounds like that investment talk went right out the window
via FT,The fee payable to HM Treasury on guaranteed issues will be based on a per annum rate of 50 basis points plus 100% of the institutions median five-year Credit Default Swap (CDS) spread during the twelve months to 7 October 2008, as determined by HM Treasury.
This fee will be applied to the principal amount of an interest bearing debt instrument and in the case of non-interest bearing debt instrument to the gross proceeds of issue of debt instruments. HM Treasury may apply its own estimate of an appropriate CDS spread if public data is unavailable.
In addition, HM Treasury may charge an incremental fee to any guarantee being applied to non-sterling denominated issuance.
The fee is payable three-monthly in arrears and/or on maturity from the earlier of the third business day after the date of the guarantee certificate and the date of the guaranteed debt issuance. The fee may be varied at HM Treasurys discretion.
Q: "Just board members foregoing bonuses? Is there a plan B if this fails"
A: "Yes lower/middle ranks get bonuses, good incentive. Do want bonuses to go beyond the initial short term fee/sale/profit...." cut off before answer on plan b
[i]Wanderer writes:
How on earth can bank nationalization be considered bullish?[/i]
"We're too incompetent to stay in business on our own...STOCK RALLY!"
4runner - spread out the sheet on a dish rack. Let dry. Alternately, hang with clips. Rinse. Repeat. Literally.
Course, we grandkids did eventually have to steal her bath towels and replace them with more plush ones. She had some that dated back 40 years. Not so functional. And they chafed.
One of her favorite sayings -
"Stretch a penny til it hollers a dollar."
What are the main principles of a banana republic?
A very salient one might be that it has a paper currency which is an international laughingstock: a definition that would immediately qualify todays United States of America.
America the Banana Republic
America the Banana Republic | vanityfair.com
""*** No dividends to be paid by banks being recapitalized by the UK ***""
Decrease tax revenue. Increase deficit. Depreciate currency.
Horee sheet!
Lookit that babee go!
Gonna be one good rally, last chance to sell this one yet.
We have unleemeeeted dollah to give you the banks they be a telling me. There's so muchie liqueedity, it puts my runs to shame.
The contangoe in the future are scaring my behind into backwardation.
Times are gonna be a changin.
EHP,
Thought overall Brown and Darling did a good job. I also liked Brown's comment that new regulation needs to come into force now, not later.
Compared to Bush and Paulson, the brit leaders come across as 'grown-ups' and far, far more competent.
I lived in the US for 14 years before moving to Europe, and must say I am really surprised at the low quality of American government officials....with the best universities in the world and the brightest minds, US has leaders such as Bush, Paulson, Rumsfeld etc.? Blows the mind that such dregs could rise up to such powerful positions.
bp,
I absolutely agree that the Brits are doing everything they should right now. My only concern, which is just a lingering thought, is if the government can sustain the financing in the worst case scenario.
*** Germany has something about 500bn+ bailout
*** France just releasing, govt creating company to buy assets/provide liquidity and the banks become shareholders of that company
*** Italy, still waiting. Cabinet in meeting
*** also, re: UK, dividends are suspended until preferred shares are redeemed. The govt will keep them at arms length, but get option of choosing independent directors. Initial timeline of hoping to wind out of equity stakes beginning in 2009. HBOS being forced to do a deal with Llloyds before it gets chance at funding. Barclay's opted to raise capital outside of gov't plan, HSBC does not need capital at least for now (had some old posts re: their leverage and loan to deposits, low level3, good loss reserves, they also were up front about their writedowns when they bought that US mortgage broker in 2006)
The Communist Manifesto written by Carl Marx and Friedrich Engels (1848), makes this year the 160th Anniversary.
Funny timing, don't you think??
Just woke up on the right coast.
This from a fellow who seems to genuinely care:
Noam Chomsky: Exposing the Un-Democratic Face of Capitalism
Unlimited liquidity means infinite liquidity. X(finite) amount of currency/infinite amount of currency----> 0 (zero)
P.S. Liquidity is just a fancy word for cash.
Dear Boss,
I keep on hearing the central bankers have caught me but they wont fix me just yet. I have laughed when they look so clever and talk about being on the right track. That joke about capital and liquidity gave me real fits.
ha ha
Jack the Markets
Don't mind me giving the trade name.
3 visitors online. I guess this crisis is over.
Is the Conjure Communique worth reading?
1929 - Irving Fisher: "Stock prices have reached what looks like a permanently high plateau."
2008 - Krugman: "Has Gordon Brown saved the world?"
CNBC - no LIBOR fix today because Treasuries market closed.
CNBC - no LIBOR fix today because Treasuries market closed.
Why does the London interbank offered rate not happen on a day when US treasuries don't trade?
Dunno. That's just what the bobbleheads are saying right now.
Apart from the fact that recapitalisation/nationalisation is only one element of this deal, the difference is that governments can now effectively tell banks "though shalt resume lending", thus avoiding the real sector from being strangled to death.
"resume lending" = "make more bad loans"
It is not a bubble if it is based on sound investments. The reason the banking system is a sham is it was based on the presumed credit-worthiness of those who cannot pay.
How are the CBs going to make the capital allocation choices for the real economy, given that there are no good choices? With what staffing and administrative mechanisms will these choices be made under the short run? Do you think the US Treasury can just pay for the entire economy out of pocket during the interim, and thereafter as needed to keep up the illusion of economic activity?
Remember, forcing the insolvent banks to lend means lending straight from the Treasury. If the US Treasury uses 80% of the global savings market to operate under normal conditions, how are they going to fit the tab for a Potemkin real economy in there? How do you think this will interact in the capital markets with everyone else's emergency borrowings?
No press release on the BBA site as of yet.
BBA – British Bankers' Association - bbalibor now has its own website
BBA – British Bankers' Association - News Room
A look at the panel members suggests other reasons:
Sterling (GBP): 16 Banks
Abbey National plc
Bank of America
Bank of Tokyo-Mitsubishi UFJ Ltd
BNP Paribas
Barclays Bank plc
Citibank NA
Deutsche Bank AG
HBOS
HSBC
JP Morgan Chase
Lloyds TSB Bank plc
Rabobank
Royal Bank of Canada
The Royal Bank of Scotland Group
UBS AG
West LB AG
Finally the worlds CB's have come to their senses. Lots of damage to the real economy already baked into the cake, but at least now they are turning off the oven. Just for persective, at friday's closing prices, if the USG were to invest the current market cap, thus giving it a 50% stake, we could own such stakes in C, MS, GS, MI, STI, FITB, BAC, KEY, NCC, JPM, WFC and ZION and still have about $200B left over from the bailout package. If we have all of those institutions shored up, I think we will be able to come out the other side of this mess. Might even make some $ out of the deal. The guarantee of the interbank lending should unstick the TED spread and make sure that letters of credit are honored.
We still have a nasty recession on the way, but we are talking early 1980's, not early 1930's anymore.
I see! The atomic rocket sled they're using against Godzilla has "infinite power". Man's new invention, bigger even that the atomic power that spawned Godzilla.
The serious looking Japanese scientist says, "Godzilla will fall before infinite power, there is no doubt. Our operators are some of the most highly trained Excel drivers in the world."
Everyone in the control room claps and mugs for the camera of the doyenne photographer, SUZI YAMAGUCHI. The photograph is solidly established in the visual narrative.
How are the CBs going to make the capital allocation choices for the real economy, given that there are no good choices?
There are good choices....
The problem is how do banks sort the living from the living dead?
With the blow-ups in the derivative markets any financial firm of any size may be holding a nuclear bomb in their portfolio with no way to unwind it. Even going over a portfolio with a fine-tooth comb won't be enough (who can predict where the next blow-up will be).
It would be nice if we could draw a fine line between the financial and non-financial sector of the economy. But, every significant manufacturing and service firm in the US has morphed into a quasi-finanical firm in recent years (GM, Ford, GE, IBM, etc).
It's even going to be hard for companies that haven't been caught up in this mess. How much of those earnings were real and how much of it was brining forward future demand through easy credit.
There isn't any shortcut to jump starting the credit market that I can see. Before we can get a sustainable bottom in the economy we're going to have to fix household balance sheets.
So put me in jail for heresy or being a traitor or whatever. But W., I'm confident, will be competing in the history books for the Worst Ever President title. We'll just have to wait and see.
Der Kommandant Weather Helm | 10.13.08 - 3:56 am | #
He sure is giving Jimmy Buchanan a run for the money, already passed Hoover, Harding, Nixon and Grant.
A little fun:-
http://3.bp.blogspot.com/_nSTO-vZpSgc/SPL0M-xPXmI/AAAAAAAADgk/nb-MpWrt4aA/s1600-h/paulson-dam.png
Kicker writes:
There are good choices....
Yeah, sorry, sloppy terminology. I mean in the aggregate. If there was a mechanism to make the good choice, really making them would IMO look like a near-halt of lending. I don't think that's the CB's intention at all.
More help is on the way :
Frank Says Congress Will Weigh Economic Stimulus Plan
Frank Says Congress Will Weigh Economic Stimulus Plan (Update1) - Bloomberg.com
House Speaker Nancy Pelosi said Oct. 9 that she will convene lawmakers to discuss a stimulus plan of about $150 billion that includes spending on public works and extending unemployment benefits.
Paul Krugman wins Nobel. Paul - you're da man. Thank you for all you do.
Congrats to Krugman.
Economics 2008
Paul Krugman wins Nobel. Paul - you're da man. Thank you for all you do.
Who else they gonna give it to ? Greenspan? Bernanke?
Lol.
Libor Rates:
Libor fixes: fractional narrowing
Oct 13 11:54
by Sam Jones
Comment
From the BBA:
*THREE-MONTH STERLING LIBOR 6.27% VS 6.29%
*THREE-MONTH DOLLAR LIBOR 4.75% VS 4.82%
*THREE-MONTH LIBOR FOR EURO 5.30%, VS 5.37%
*OVERNIGHT STERLING LIBOR 5.60% VS 5.81%
*NO OVERNIGHT DOLLAR LIBOR FIXING DUE TO U.S. HOLIDAY
*OVERNIGHT LIBOR FOR EURO 3.78% VS 3.89%
Which means the Libor-OIS spread has only narrowed a fraction - just four basis points - to 362bps.
In: Capital markets
I know it's not possible today since the bond markets are closed, but shouldn't we start worrying about a bond market revolt? How many trillions of new govt debt will be issued around the world? I think could be they, the bond market, the delivers the body blow.
feesher
Krugman wins Nobel prize of economics
....shouldn't we start worrying about a bond market revolt? How many trillions of new govt debt will be issued around the world? I think could be they, the bond market, the delivers the body blow.
If it's unwise to fight the Fed, it less wise to fight a coordinated move by all the CBs world wide. I also suspect they checked with China before taking this stance.
Can I just vent a slight amount of pedantic spleen here.
Props to Krugman, but it's the Bank of Sweden Prize for economics.
Nobel didn't leave any money for that prize.
sviden writes:
Krugman wins Nobel prize of economics
As did Myron Scholes and Robert Merto
Libor fixes: fractional narrowing Oct 13 11:54
Ah, what do you know, the bobbleheads didn't get it quite right.
Fight the Fed? You're joking, right? We were supposed to not "fight the fed" a year ago when they started the first teensy weensy TAF auction. We had a fed backstop, right? All was well.
Until the Fed takes the $1T+ off of non-govies off of it's balance sheet, it is wounded. If it's only bazooka left is the printing press, the bond market does revolt. China not-withstanding.
Ah, what do you know, the bobbleheads didn't get it quite right.
Naturally, no admission of ignorance occurred.
But to the bigger point: All that for 6bp in libor?
When will the politicians realize that weak companies require elimination from the system?
yup, congrats to Krugman and a hey ho for Economic Geography too!
Krugman wins "Nobel Prize for Economics"?!?! (no such award exists- f^@! awards anyway) Did the committee read any of his analyses on the non-existent oil speculation driving up oil to $147/bbl this summer? Are they loyal only to the hebes?
Hey, one of Tanta's biggest fans just won the Nobel prize!
Mouse:
Are they loyal only to the hebes?
Clearly, the situation calls for Jew-baiting?
Congrats to Krugman! this should increase his credibility with the new administration.
PCA, care to explain the antisemitism?
smurf writes:
Congrats to Krugman! this should increase his credibility with the new administration.
Like the republicans will heed his advice.
LIBOR will fall more once the money starts flowing, but long-term UST are gonna tank (slowly) as Asia backs off the vendor-financing.
no matter what, the bill is due.
Byzantine_Ruins writes:
Mouse:
Are they loyal only to the hebes?
Clearly, the situation calls for Jew-baiting?
I wouldn't cross the street to spit on him. I'd rather share my hatred on a forum he occasionally peruses- maybe I can make him cry
For all you goldbugs:
Video - Breaking News Videos from CNN.com
"if the USG were to invest the current market cap, .... If we have all of those institutions shored up"
That is like saying you could stabilize GM by buying it at its market cap. These institutions have hundreds of billions each in liabilities beyond their market caps. Just owning the debt won't fix them.
I wouldn't cross the street to spit on him. I'd rather share my hatred on a forum he occasionally peruses- maybe I can make him cry
And you think antisemitic comments are going to help your cause?
JP writes:
PCA, care to explain the antisemitism?
When you have a group of people - all within an elite class, not merely ethnic group - who are regularly promoted to positions of power dealing with crucial decisions about production, finance, commerce, and analyses of such, I'd say using an ethnic slur against that group is acceptable in accompaniment w/ lividity toward those crucial levers of power/nonsensical work they routinely carry out.
When you have a group of people - all within an elite class, not merely ethnic group - who are regularly promoted to positions of power dealing with crucial decisions about production, finance, commerce, and analyses of such, I'd say using an ethnic slur against that group is acceptable in accompaniment w/ lividity toward those crucial levers of power/nonsensical work they routinely carry out.
You are officially out to lunch. Recommend strongly that you apologize to the folks on the board, Jewish or otherwise. (I'm the latter.)
Worth listening to, you don't really know how bad it is till you listen to this :
http://www.netcastdaily.com/broadcast/fsn2008-1011-2.mp3
So, as the plan switches from buying toxic debt to semi-nationalizing the U.S. banks, who are the big winners & losers, and who will be the most furious (with the biggest potential to lobby hard against this)?
When you have a group of people - all within an elite class, not merely ethnic group - who are regularly promoted to positions of power dealing with crucial decisions about production, finance, commerce, and analyses of such, I'd say using an ethnic slur against that group is acceptable in accompaniment w/ lividity toward those crucial levers of power/nonsensical work they routinely carry out.
Persecuted Comrade Anonymouse | Homepage | 10.13.08 - 7:51 am | #
You might want to look into the history behind why the Jewish population got into finance in the first place. The reason might surprise you. Persecution has strange side affects.
Wow, I just got here. I'm so glad to see someone else besides me is calling someone on their anti-semitism. The other day someone was bashing Paulson (!!!???) for being Jewish and I tried to both correct his misconception and rebuke the bigotry, but got no support from others.
Congrats to Krugman!
JP,
The only time I've seen people get offended/banned from this blog is when Jews are insulted. If you were so offended by my comments, you should have let them be - just put me on your ignore list. I addressed your question in a reasonable manner. I made 1 passing slur and now you're giving it more attention than you believe it deserves(??) Talk about the last Taboo.
Wow, PCA, you're acting like we're just being politically correct. Like anti-semitic comments have never really hurt anyone.
Care to rethink that?
Anonymouse, I recommend that you go hide in a hole and never crawl out again.
PCA, back away from the keyboard. Your losses have clearly taken you over the edge.
Robert Mugabe and Alan Greenspan were knighted by the queen of England. Was that just English humour, or something else?
While the estimates that go into Libor used to be based on actual transactions between banks, they have become little more than guesswork since credit markets froze, three people with knowledge of how interbank rates are set said last week.
source: Libor Dollar Rates Drop After Governments Step Up Bank Rescues - Bloomberg.com
I've been annoyed with Anonymouse since the time several months back when, during a discussion of where Tanta was, he wrote "daed si atnat, daed si atnat" as a post.
Creepy and beneath contempt.
Popeye, you might want to check out the Conjure communique last night...
RBS sez you either got it, or you don't. Money that is...guess they don't.
No the last taboo here appears to believing there will be an election this November, or maybe that some one somewhere really wants to terrorize us in name of Muslim ideology, or that maybe Obama isn't qualified to be president.
remmah detrevni remmah detrevni
Mouse:
I happen to believe that the pro-Israeli lobby has enormous influence over US foreign policy, but I shall ignore your comments from now on.
now you're giving it more attention than you believe it deserves(??)
Conversely, you are giving less attention that you believe it deserves.
I say again: I recommend that you quickly issue an apology to the board.
"Carl Marx"
Who is that?
Andrew Foland writes:
...... Conjure communique last night...
Pretty tough to search 1,000 posts on 10 threads {I didn't actually count them}
Can you offer a hint ?
kevin de bruxelles,
Friday's close resembled, but did not qualify imo, as a reversal hammer, although how the body of SPX/NDX gapped outside previous day's body once again indicated at least a s.t. reversal. We'll see where things stand a mere 3 weeks from now.
I thought Carl Marx might be related to Karl Manx.
Kashkari said nothing worthwhile, no details.
mp writes:
CONJURE COMMUNIQUE
Conjure Bag's first discussion paper, "LIBOR, Interbank Lending and The Banking Crisis", is now available at this link:
this link.
mp | 10.12.08 - 11:04 pm | #
Let's get back to bashing Christian Scientists. And their oddly fervent sidekicks.
Good morning and congrats to Paul Krugman for winning the Nobel Prize.
MP,
Thanks for trying.... unable to access.
So, up 1,000 today?
The lack of detail in Kashkari's sermon combined with the incredible scope of the European plan could have some consequences after New York opens.
karelian writes:
The lack of detail in Kashkari's...
I think it might take a day or two or three to have a neg effect. Financials appear to be taken care of with rescue plan, lack of lending assurances could drag down others
Page 1 of 4
Conjure Bag Discussion Paper LIBOR, Interbank Lending and The Banking Crisis This discussion paper is the first of a series on financial markets and the US economy.
The BBA (British Bankers Association) LIBOR (London Inter-Bank Offered Rate) is a product offered for ten major dealing currencies and a range of terms varying from one day up to one year. According to the BBA, LIBOR is the primary benchmark used by banks, securities houses and investors to fix the cost of borrowing in the money, derivatives and capital markets around the world.1 In fact, BBA LIBOR products are used to price $150 trillion worth of financial instruments.2 In the United States, for example, $US BBA LIBOR is used to price adjustable rate mortgages.
This paper deals specifically with the 90-day $US BBA LIBOR because it is used, along with the yield on the 90-day US Treasury, to compute the so-called TED (Treasury Euro-Dollar) Spread. The TED Spread, economist Paul Krugman says, is a measure of financial jitters.3 Lets begin by examining BBA LIBORs terminology and construction method. $US BBA LIBOR Administrative Structure. A daily $US BBA LIBOR Fixing is computed by the Designated Distributor from rates submitted by each member of a sixteen-member Contributor Panel. Members are selected by the BBA annually by the FX and Money Markets Advisory Panel after consulting privately with the LIBOR Steering Group. Here are the key details of the administrative structure:
Fixing. An individual BBA LIBOR Contributor Panel Bank will contribute the rate at which it could borrow funds, were it to do so by asking for and then accepting inter-bank offers in reasonable market size just prior to 1100.4 Panel members submit their rates to the Designated Distributor between 11:00 and 11:10hrs London time. The details of how a panel member determines their individual rate will be addressed later in this paper. Designated Distributor. Reuters, the Designated Distributor, examines the rates submitted by the individual panel members between 11:10 and 11:30hrs London time and, in coordination with panel members, corrects any manifest errors found in the submitted rates. Reuters then sorts the rates by value and computes an arithmetic mean, or so-called average, of two-place accuracy from the second and third quartiles of the ranked rates. At or around 11:30hrs London time, Reuters publishes the average rate and individual panel members rates. After 11:30, Reuters corrects any additional manifest errors, if found, and publishes the rate as the BBA LIBOR Fixing at 12:00hrs London time.
1 BBA – British Bankers' Association - bbalibor now has its own website 2 Bev Levisohn and Lauren Young. The Lowdown on LIBOR. Business Week, May 29, 2008, 5:00PM EST 3 Paul Krugmans Blog, March 14, 2008, 4:04 PM. 4 BBA – British Bankers' Association - bbalibor now has its own website
Pg 2 of 4
Contributor Panel. As noted above, the members are selected in a private manner, meaning the selection process is not open to public scrutiny. The current members of the panel are: Bank of America JP Morgan Chase Bank of Tokyo-Mitsubishi UFJ Ltd Lloyds TSB Bank plc Barclays Bank plc Rabobank Citibank NA Royal Bank of Canada Credit Suisse The Norinchukin Bank Deutsche Bank AG The Royal Bank of Scotland Group HBOS (Halifax-Bank of Scotland) UBS AG HSBC (Hongkong and Shanghai Banking Corp.) West LB AG FX and Money Markets Advisory Panel. This group is currently opaque to us. LIBOR Steering Group. This group is currently opaque to us. Rates. The prescribed mechanism by which individual members of the sixteen-member Contributor Panel arrive at the rate they submit to Reuters is the most fascinating part of the BBA LIBOR administrative structure. Rates are not based on pending or executed deals, but on contributor beliefs. Consider this pitch from a BBA publication: Transparency has long been one of the key attractions of LIBOR. Other indices either keep their contributors confidential (H15) or the bank is asked to contribute the rate at which it considers a hypothetical bank would borrow (EURIBOR). LIBOR contributors on the other hand provide the rate at which they believe they could borrow should they propose so to do. [Emphasis supplied] The issue has been raised as to whether this has the potential to stigmatise contributions and therefore the BBA proposes to explore options
for avoiding any stigma whilst maintaining transparency.5 It is comforting to know that were talking about hypothetical deals rather than hypothetical banks. The potential for abuse is manifest. Consider again the paragraph labeled Fixing near the beginning of this paper. An individual BBA LIBOR Contributor Panel Bank will contribute the rate at which it could borrow funds, were it to do so [emphasis supplied] by asking for and then accepting inter-bank offers in reasonable market size just prior to 1100.
The individual contributor is asked to make a guess as to what the rate would be if they chose to borrow funds at 11:00hrs. A controversy arose a few months ago as to whether individual contributors
5 British Bankers Association. Understanding the construction and operation of BBA LIBOR- strengthening for the future. June 10, 2008, p. 2.
Is today one of those days of a "looking for any reason to rally" rally?
Do the bankers have a target for their forced inflation? Is there a plan in place to ease into that target? Finally, how do they expect the extra money to get into wages in time to bolster the housing market?
Bush/Berlusconni joint press conference at 10:15. Strange duo for a presser on a global financial crisis
CashCarry sure showed me that they are in charge of who lives and who dies.
Pg 3 of 4were
quoting falsely low rates for the surveys in order to force down Libor and paint a rosier picture of the lending environment.6 Ill offer an alternative explanation. As explained in the paragraph labeled Designated Distributor, individual rate contributions are published by Reuters. An individual member of the contributor panel might falsely quote a rate in order to avoid jeopardizing the members standing among its peers. So, we must consider the likelihood that the integrity of LIBOR is compromised. Finally, a recent Bloomberg article notes the following:
While the estimates that go into LIBOR used to be based on actual transactions between banks, they have become little more than guesswork since credit markets froze, according to three people with knowledge of how interbank rates are set.7 Were led to consider an unsettling question: If credit markets are truly frozen and there is no interbank lending, how can there be a LIBOR rate?
Its likely that BBA LIBOR has been gamed because its continuous publication is vital to the on-going pricing of many financial instruments and too much is at stake. Failure to publish a BBA LIBOR Fixing would roil the markets for trillions of dollars worth of instruments. Arbor Research analyst James Bianco, via nakedcapitalism.com, offers additional findings that suggest LIBOR has indeed been gamed.8 Consider the graph from nakedcapitalism presented below.
6 Levisohn and Young. 7 Gavin Finch and Nate Hosoda, Bill Rates Fall, Libor Rises as Credit Remains Frozen. Bloomberg, October 10, 2008
8 "Are Central Banks Making Libor WORSE?" « naked capitalism
another Bush-hater wins a nobel prize. how will a person qualify for these awards after bush is out of office?
In London, banks with their snouts in the trough are down a lot - because their equity will be diluted heavily. Which is how this is supposed to work.
In New York, banks most likely to require bailout money are up a lot in pretrading. Which is not how this is supposed to work.
Is Neel still planning to shovel out the bucks with no dilution?
Pg 4 of 4. (graph didn't transfer)
Since August 2007, the spread between the highest and lowest rates contributed by members of the Contributor Panel has been rising. These spreads are not what wed expect to see in functioning markets and suggest that the Contributor Panel is pulling numbers out of thin air. Yves Smith states: Prior to August 2007, it was unusual if the variation between the highest and lowest reporting bank was more than 1 or 2 basis points. Now it is regularly above 100 bps. As we like to say, a number so big no one understands it. Too much central bank liquidity has destroyed the inter-bank lending market. [emphasis- Yves Smith] This would be an inside baseball issue for the banking system except Libor is the benchmark for the real economy to get a loan. Libor is written into contracts and we have no good substitute. If Libor is screwed up, then the real economy pays because it needs Libor to get a loan.
This also means the markets new favorite idea of having G7 countries guarantee all inter-bank loans will do nothing.9 Ive come to the conclusion that the $US BBA LIBOR may now be bogus, as well as any instrument priced on it. If that conclusion is correct, it means the TED Spread is bogus as well. There is also an additional, more diabolical, consideration. Consider the possibility that $US BBA LIBOR and TED Spread might no longer be an expression of market jitters, but a fabrication used to torture central bankers, particularly Bank of England, for more $US liquidity. Fear can flow both ways, and the London banks may be using BBA LIBOR as a stun gun. Yves Smith is probably correct when she says central bank liquidity is destroying the London interbank market. Why borrow in the interbank market when you can borrow from the central bank? Finally, and obviously it would seem, stay away from BBA LIBOR-priced financial products for the foreseeable future. In a future discussion paper, Ill address the ideas discussed here in greater detail Have a nice day. Conjure Bag
9 Ibid
Popeye, I'm in the same boat.
Mediafire doesn't support pdf download to Safari. Pity. I was looking forward to Conjure's thoughts.
Anyone care to produce an abstract? Probably a lot to ask.
Nobel prizes are politically motivated in some cases and most certainly overrated.
I believe 73% of Americans qualify as "Bush haters" in the latest polling data available at Pollster.com.
This would seem to imply that the odds of any US Nobelist being a Bush hater are fairly good - even without evoking Swedish conspiracies.
Is today one of those days of a "looking for any reason to rally" rally?
Of course not... didn't you listen to the Techincal Analysis folks?
Today's open will flooppin on the fooble froz, because of last weeks snizzle whapper do-warble. This clearly shows a bleebel-blort frustle zniff.
Anyone can see that.
The Nobel prize for Paul Krugman is being reported in Korea, too.
According to that article, he "was noticed around the world for having predicted the Asian finance crisis as early as 1994".
I like "unlimited". So much more positive than "limited".
I would also suggest that our govt officials utilize the word "bold" in their public statements more. I like "bold". So much better than "crazy" or "insane" policies/measures.
Finally, instead of careful and prudent behavior from anyone associated with banking, one may completely denude their skin of hair follicles. Form over function, you see.
anon, thank you.
According to that article, he "was noticed around the world for having predicted the Asian finance crisis as early as 1994".
Peter Shiff predicted the demise of the dollar way back in 2003, give him a Nobel prize will you.
Popeye,
Transferred all 4 pages of Conjure's report a few comments earlier in 4 separate pages.
Graphs didn't transfer. Hope this will help.
I cant get past "unlimited Liquidity"
eric-
c'mon, everybody knows the bleebel-blort frustle is a lagging indicator.
turn in your slide rule at the front desk.
Executive pay set for radical clampdown
Executive pay set for radical clampdown |
Business |
guardian.co.uk
The deal will see RBS take £20 billion of capital from the Government, effectively handing taxpayers a 63 per cent stake in the company.
A further £17 billion is to be injected into HBOS and Lloyds TSB, meaning that if their plan to merge goes through, 41 per cent of the new "superbank" would effectively be owned by the public. Until then, the Government will take 58 per cent of HBOS and 30 per cent in Lloyds TSB
...snip...
Despite the FTSE-100 rising, shares in HBOS had dropped another 25 per cent by midday, with Lloyds TSB having lost nine per cent and Royal Bank of Scotland (RBS) down 6.7 per cent. The banks have been ordered to stop paying dividends to shareholders until they are in a position to pay back the public purse.
Financial crisis: Banks plummet after bail-out deal - Telegraph
c'mon, everybody knows the bleebel-blort frustle is a lagging indicator.
Yeah, but if I keep posting my predictions every morning, one day I'll be right about the bleebel-blort frustle.
i have to admit, sitting in cash and watching all my "picks to click" rip higher for the next 2 weeks is gonna be really tough.
patience, patience.....
Krugman wins Nobel Prize in economics. Richly deserved. Very.
i have to admit, sitting in cash and watching all my "picks to click" rip higher for the next 2 weeks is gonna be really tough.
When I cashed out of all my shorts Friday, I just couldn't bring myself to stay 100% cash.
So I kept a Mar SPY 60 put 130 call position on, each is only 1% of my portfolio.
What's gonna make me sad is the Oct 97 Calls I bought last week but covered Friday mid-morning.
Anonymous, MP, Conjure
Read and captured for later re-read. Thank you very much.
ullpointer writes:
i have to admit, sitting in cash and watching all my "picks to click" rip higher for the next 2 weeks is gonna be really tough.
patience, patience.....
So you're not going to come out and play today?
Re Krugman's prize. Are there any Nobel winners that one knows of who are for McCain?
nullpointer writes:
i have to admit, sitting in cash and watching all my "picks to click" rip higher for the next 2 weeks is gonna be really tough.
Buy fear... only wait for crisis peak.
Nullpointer, doesn't always work though.
jim writes:
Re Krugman's prize. Are there any Nobel winners that one knows of who are for McCain?
Kissinger won a Nobel didn't he?
If they are going to set liquidity to Unlimited, are they going to set my money market APY to Infinite?
You mean the famous economist, Kissinger?
As a former GSE shareholder, a bit miffed that the banks, who are just as guilty of wrongdoing, are going to get recapitalized without taking a hit to their common stock; in fact, it seems their shares are gaining on the news. Where is the outrage there? We were so upset with the original bailout plan, but no one seems to care that the Fed wants to give banks money, without affecting their common!!
I know the banks got hit in the UK but seems there is a different plan here.
You might want to read the comments Sunday after the Conjure Report was released at around 11:03 pm. Very interesting.
UK Announcement Before 7 AM BST, Stock Exchange to Remain Open
by CalculatedRisk
So you're not going to come out and play today?
no, and here is why:
i am pacing the halls now, mentally repeating these 2 facts.....
Can someone explain to me again why unlimited liquidity will make a hill of beans difference when the problem is confidence, solvency? While it keeps the banks open when no one else will lend to them it solves neither the confidence or the solvency issue as far as I can tell.
Are they trying to prop this up long enough to get CP funding of the holidays? Do they intend to do this forever? How is this not currency suicide?
How on earth can bank nationalization be considered bullish?
Those near the front of the line always get the best effects of free money. Unfortunately the benefits quickly diminish the further you are from the original source. This won't trickle very far - but the same ass wipes who still owned equities at the beginning of last week won't know this.
Sorry Ben...
jim writes:
Re Krugman's prize. Are there any Nobel winners that one knows of who are for McCain?
Just proves that it's a political prize. Would have more prestige if it wasn't.
jim writes:
You mean the famous economist, Kissinger?
No, the lying, duplicitous, war mongering Kissinger
Anybody who believes there is 'unlimited liquidity' is incorrect.
There can be too much money and when that happens it must be destroyed by default or inflation.
The chosen course was just announced.
Orh THAT Kissinger.... who called Indra Ghandi an "old witch" or did he just laugh when his boss called her that? I don't recall.
Hayek won Nobel Prize for pointing out that CB's and fractional reserve banking cause extreme bubbles and busts. I think it was 1973.
OK - so Nobel would have more prestige if there were winners who support McCain. Would that apply to Sarah Palin? Would Nobel be more prestigious if there were winnners who support Sarah Palin's economic policies?
See how absurd it is to demand that no political candidate has more absolute merit than any other?
Well put Karelian.
Treasury to Invest in `Healthy' Banks, Kashkari Says (Update4) - Bloomberg.com
"Oct. 13 (Bloomberg) -- Treasury Secretary Henry Paulson's program to buy equity in financial institutions will be optional and aimed at ``healthy'' firms, said Treasury Assistant Secretary Neel Kashkari."
Ok, who's taking bets MS, GS are 'healthy' enough to participate in this program despite their balance sheets?
There might be some Nobel economists who will vote for McCain but I suspect they are too ashamed to admit it.
jim writes:
Orh THAT Kissinger.... who called Indra Ghandi an "old witch" or did he just laugh when his boss called her that
I believe he just laughed and took notes as a ginned up Nixon on his knees, praying to the White House portrait of Abe Lincoln, blurted out that comment
jim writes:
There might be some Nobel economists who will vote for McCain
Phil Gramm win a Nobel?
I think Nixon was telling of his meeting with her in the Oval Office and said "I slobbered all over the Old Witch".....explaining his charm offensive and diplomatic skills.
2 new threads
They are in no way working with solvency issues and these will only get worse because the economy is deteriorating.
A lot of the stuff on the banks' books is worth 0 but they don't want to admit it. Investors aren't stupid, they know 0 stuff is still on the books. As long as this 0 stuff is still floating around, investors won't commit.
Then there's a lot of stuff that's lost some value and investors would happily pick up given the right credit spreads. But our leaders refuse to let the market determine the proper credit spread on these assets. They think that by supportin it with low rates, they're fixing the problem!
The biggest problem is that our leaders are doing everything possible to keep rates low when in fact credit spreads should be increasing. They do not want rates to go up at all because they fear massive deleveraging.
So they're going to continue to keep those delinquent assets as long as they can't decide who's going to pay for this mess.
It's going to fail and the market will end up deciding who wins and loses.
"Just proves that it's a political prize. Would have more prestige if it wasn't."
Sour grapes. The republicans are just going to have to find some witch doctors to give them a prize for voodoo economics...maybe a matching pair of shrunken heads.
The die is now cast, it appears. Just look at that quote:
This will be extended to all types of borrowers including unprofitable corporations and other politically connected entities. In the US, that will be auto companies, airlines, state and local governments, and homeowners, too. The bad debts now collect on the government balance sheets and truly profitable new ventures will be starved for capital.
The socialists have finally won. In 20 years we won't even remember what prosperity even is.