The Banker's Money Pit swallows helicopter funds at an increasing and alarming rate. When do the Fed and the BOE run out of paper and printing ink ?
The quantity of money that the US Federal Reserve is prepared to throw out of the helicopters is truly staggering. Just to keep you up to speed , Banks and securities firms have posted losses exceeding $188 billion since the start of last year as the impact of surging defaults on subprime mortgages has roared through world financial markets like a tsunami on a Thai holiday beach.
That really is one helluva hole to fill.
That of course is merely the write offs they have made, what else is hiddden on their rotten fraudulent balance sheets ? What unrecoverable loans are there out there ? For example Barclays (on Dec 20th) are sueing (some fucking hope) Bear Stearns for US$400 Mn over 2 collapsed (and likely fraudulently run) Cayman Islands based Hedge funds.
Fed Chairman Bernanke started to fill up the bottomless money pit a day later on 21st December offering a measly Christmas present of US $20 billion, (Technically, the Fed auctioned off US$20 billion in loans - just to confuse they call it - Term Auction Facility TFA) which 93 banks bid for US$61 BN at a rate of 4.65% - which was a 10 basis points below the Fed's discount window at the time of 4.75%.
Then well after the Christmas turkey had been gobbled, he held some slightly more generous US$30Bn auctions , quickly followed by the promise of of 2 planned auctions on March 10 and March 24 of US$50 Bn. dollars - now he has anniounced the same unpleasant medicine for the moral hazardless bankers of a further US$100 BN in April - and the rumour is this will carry on at this rate until September. Or even at a higher level.."The Federal Reserve, shortly before the report was released, underscored its concern for the economy by saying it will pump more cash into financial markets to try to ease credit."
In an unorthodox move the Fed is llowing investment banks to borrow from it directly - a facility previously only the privilege of commercial banks. Presumably the loan of US$29 Bn. to J P Morgan for Bear Stearns made the process a mockery ... which is what it was.
The Fed's chairman, Ben Bernanke, will be quizzed about the auctions, by Congress next week, but they haven't got any bright ideas about what to do either . Does it have anything to do with the slide against the Euro? The yawning trade deficit ? The yawning budget deficit ?.. well never mind the suckers who voted will get their tax backs soon and everything , everything I tell ya will be fine.
Please don't anyone ask what happens when the Fed run out of pritning ink and paper.
Spring Break is just around the corner !!!!
This week there were concerted moves by central banks to bring down the Libor - the rate at which banks lend to one another - which stays stubbornly at levels that prevailed at the beginning of the credit crunch. As the banks are all liars and crooks, they won't lend to each other as they know all the other bankers are liars and crooks and they can't sucker the public much longer and stuff their fictuive balance sheets with illusory assets.
Its's no better in London
Bank of England governor Mervyn King met the Commons Treasury Select Committee on Wednesday, after the Bank put an extra £5bn into the market last week.
..." The Bank of England would continue to offer extra money in the markets as a short-term way of boosting confidence in the system," and added , confirming that they haven't a fucking clue what to do ..."The Bank of England would continue to offer extra money in the markets as a short-term way of boosting confidence in the system"
" longer-term solutions would be discussed with UK banks" .. i.e we will see if they have got any better ideas what to do.
..today the £ closed against the € down 0.092 or 0.75% @ € 1.26215 lowest ever.
The UK housing market has healthy demand boosted by insane planning laws, pent up demand from a ruising population, and fragmenting families - the market is sound although prices will rise more slowly (apparently only 1% nationally last year) and mortages will be more expensive. The insane HIP's , stamp duty, and other costs will help depress upward mobility and therfore market movement.
Wages will be held down, as inflation, led by energy and food costs will roar away pushed by global markets and forces.
Sterling will decline, against the Euro and end up at something like parity by Christmas. The decline against the dollar will be slower and shallower probably hitting US$1.80 at the same time.
Unemployment is such a fudged figure it is impossible to evaluate how it will be affected.
Constrained by the flow of funds Goverment spending will be hit, aircraft carriers, Nimrod, and asome submarines will go. The NHS will feel the pinch, transport subsidies will be cut ....
And Benranke and King the helicopter pilots will take a well cushioned early retirement.