"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Friday, March 21, 2008

Slip slidin' away ....You know the nearer your destination The more you're slip slidin' away Mmmmm...

God only knows
God makes his plan
The information's unavailable
To the mortal man
We're working our jobs
Collect our pay
Believe we're gliding down the highway
When in fact we're slip slidin' away

Trying to make sense of what is happening in the markets and sense in the response of the authorities 2 items of note appear to identify the approach to moral hazard the bankers take as their jobs, their banks and their incomes slide away.

1. ) The US is financed by foreign purchasers of US treasury Bonds.
In June last year $6,007bn of long-term US debt. (=66% of total US Federal debt) was owned overseas.

The biggest holdings (In descdending order) by country are, in billions: Japan (901), China (870), UK (475), Luxembourg (424), Cayman Islands (422), Belgium (369), Ireland (176), Germany (155), Switzerland (140), Bermuda (133), Netherlands (123), Korea (118), Russia (109), Taiwan (107), Canada (106), Brazil (103).

Last week at the auction only 5% rather than the usual 25% (ish) was bid for. The result was the US$ slid further against the Euro (1.57 - it was parity when the US ilegally invaded Iraq) and cae near parity with the Swiss franc and slid through the Yen 100 barrier.Thevolume of rumour about Gulf States and eastern states jettisoning dollar pegs is rising.

2.) The Treasury Department (Office of the Comptroller of the Currency or OCC)issued a new rule that essentially allows certain national banks to exceed the established limits on lending to any one entity.
"Description of the Interim Final Rule
The interim final rule adds a new § 32.8 that permits an eligible bank,with the written approval of the OCC, to make loans and extensions of credit to one borrower subject to a special temporary lending limit established by the OCC, where the OCC determines that such loans and extensions of credit are essential to address an emergency situation (such as critical financial markets stability), will be of short duration, will be reduced in amount in a timeframe and manner acceptable to the OCC, and do not present unacceptable risk. In granting approval for such a special temporary lending limit, the OCC will impose supervisory oversight and reporting measures that it determines are appropriate to monitor compliance with the standards contained in new § 32.8. The § 32.8 special temporary lending limit is in addition to the amount a national bank may lend to one borrower under § 32.3, i.e., the combined general lending limit
and applicable exceptions."

EFFECTIVE DATE: Effective Date: This rule is effective on March 20, 2008. Comment Date: Comments must be received by April 21, 2008.
Dated: March 17, 2008.
John C. Dugan,
Comptroller of the Currency.

Fuller details are available here at Trading Markets.com
Complete details are in the Federal Register

This adds the fascinating insight to the way this has been rushed out ...

Consistent with section 553(b)(B) of the APA, the OCC finds that good cause exists for a finding that notice and comment is impracticable and contrary to the public interest. As previously described, temporary funding arrangements in emergency situations are critical to maintain the orderly functioning of markets and provide market liquidity. Completion of notice and comment rulemaking procedures prior to issuing this interim final rule would require delaying implementation of the final rule. In the current market environment, such a delay is impracticable and inconsistent with the public interest since it may result in undue constraint on the national banks' ability to perform critical lending and financial intermediary roles which are critical to the orderly functioning and liquidity of markets. Issuance of this interim final rule furthers the public interest because it will provide the OCC with an additional tool that will help ensure the safety and soundness of national banks and liquidity to the credit markets. For the same reasons, the OCC finds good cause to publish this rule with an immediate effective date. See 5
U.S.C. 553(d)(3).

Is it being rushed to retroactively make legal the JP Morgan acquisition of Bear Stearns ?
Does it presage a tsunami of calls as banks deleverage ? If the banks "make loans and extensions of credit to one borrower subject to a special temporary lending limit established by the OCC" and they then go bust and the loan is lost ... ?

Whatever it is, the panic is rising.

Next thing is we nationalise the banks - as the Nordic crisis in the 60's and Northern Wreck.

Good job they have built all those camps for "illegal immigrants" ....

Hundreds seeking housing money overwhelm Boca Authority Palm Beach Post.com
See video report

"Leave or face arrest," police officers shouted at the crowd as they urged them out of the housing authority parking lot. People were made to leave the vicinity altogether, with officers forcing them to cross the street and move toward their cars.

The overwhelming turnout of people desperate for housing money came as little surprise to Suzanne Cabrera, president of the Housing Leadership Council of Palm Beach County.

"This is an indication that housing it's still a huge problem," Cabrera said this afternoon. "It's a reflection of people's concern for housing, their uncertainty. I got people today asking me: was this my last chance to get housing I can afford?"

Yeah ... Good job they have built all those camps for "illegal immigrants" ....

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(C) Very Seriously Disorganised Criminals 2002/3/4/5/6/7/8/9 - copy anything you wish