"“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

Thursday, February 05, 2009

Having thrown money at the banks - saved the world, considered worldwide depression .....

BOE Special Liquidity Scheme - the Plan - April

On 21st April 2008 the Bank of England launched their Special Liquidity Scheme (SLS)providing participating banks to swap temporarily their high quality mortgage-backed and other securities for UK Treasury Bills.

With securities markets shut the banks had on their balance sheets an 'overhang' of unsealeable and unpledgeable assets (they were also in fact simply lying about their value in their books and had been for some time.

The SLS Scheme, let the banks swap illiquid assets of allegedly "high quality" for Treasury Bills- which near money or as good as money in the till.

The scheme has three key features:

Swaps would be for a period of 1 year and may be renewed for a total of up to 3 years.

The risk of losses on their loans remains with the banks.

The swaps are available only for assets existing at the end of 2007 and cannot be used to finance new lending.

Initial discussions with banks suggested that use of the scheme is initially likely to be around £50bn.

The Scheme will be "ring-fenced" and independent of the Bank of England's regular money market operations. So it will not interfere with the Bank's ability to implement monetary policy.

BOE Special Liquidity Scheme - the Plan - 9 months in operation.

Some details have been published yesterday about the BOE/SLS scheme (the drawdown period for the SLS closed on 30 January) which are truly breathtaking.

1. Biggest user was HBOS which packaged £ 53 Bn alone.
2. 32 banks and Building Societies participated.
3. More than 80% of the Sterling Balance Sheet Items of the participants has been swapped.
4. This meant a staggering £185 Bn. was borrowed.
5. This was swapped for £287 nominal value of packages of mortgages in the first 9 months of the scheme.
6. This means the borrowing banks accepted a "haircut " of £102 Bn which the BOE factored in as an insurance on a reduction in the value of the loans.
7. This BOE "haircut " can grow as the original intention was that the "The risk of losses on their loans remains with the participating banks."

The bottom line is of course that no-one really knows what has happened to the Treasury Bills - has their value been used to fund uy outs, loans overseas, bonuses, pay offs to redundant bankers who steered their banks onto these financial shaols by producing fraudulent balance sheets.

...and of course there is still the complaint that no more funds are available to commerce and industry after this huge exercise.

Because of this other facilities remain open - for example , the Bank’s Discount Window Facility, introduced in October 2008 as part of the Bank’s framework for its operations in sterling money markets remains.

Eligible collateral is wider than that accepted in the SLS and is not limited to assets on balance sheets before a particular date. In recognition of the continued stresses in financial markets, the Bank announced on 19 January 2009 that, for an additional fee, access to its Discount Window Facility was being extended to 364 days in addition to the normal 30-day window, which would continue to be available.

The Bank of England has also today reduced Bank Rate by 0.5 Percentage Points to 1.0% and their Press release states ..."Credit conditions faced by companies and households have tightened further. The underlying picture for consumer spending appears weak. Businesses have responded to the worsening outlook by running down inventories, cutting production, scaling back investment plans and shedding labour. "

UPDATE : Daily Mirror Friday

The Government / taxpayer owns 68% of hugely loss making RBS who have persistently produced fraudulently valued assets on their balance sheets for several years.

RBS's investment banking division paid out £1.83 billion in salaries in 2007, most of it in the form of bonuses, and is reportedly ready to pay out further bonuses for last year.

15 comments:

S said...

Postie,

can you dig any deeper on the subject of Long term costs of PFI schemes coming onto the government 'balance sheet'?

See my comments on this blog post.

(An explanation of 'Technical Note 1' seems hard to find).

The not insignificant costs of PFI schemes (particularly now that the gov owns RBS etc., which must have funded some of these PFI schemes) will certainly put a blip on the UK public debt figures.

I think the requirement to put the costs 'on balance sheet' comes into play in April 2009, but there is very little info out there as to what effect it will have on the pound/UK markets etc.

ziz said...

I think if anyone could really assemble the TRUE costs of the various PFI / PPP offf - off - off balance sheet , off- off shore schemes (Private Eye have chronicled many over the years eg IR - Maplan ) for England / Wales/ SCotland / NI ("Peace Dividend" we would all crap ourselves.

Now these new "schemes" are slowly unfolding - eg the Brad & Bingley , they wrote off £4 BN in one afternoon so Abbey could take on the depositors - no debate, no proper announcement - ie an aircraft carrier in one go.

EG SIS "Initial discussions with banks suggested that use of the scheme is initially likely to be around £50bn."

9 measly months later, the tax payer is hanging onto £287 Bn. ... for the next 3 years (ish) and you just know that it will silently be folded into a new scheme at some future date with rdemoption leading onto my great, great, god child's funeral.

On top of this trying to calculate effects on international trade effects , Balance of payments, run down of N Sea oil/gas, prosecuting pointless wars, becomes about as accurate as counting the number of seraphim that can comfortably be seated on a pin head (given that it is a sunny day).

A favourite "what if" might be for example. Say in January 2007 it became known publicly that the CEO of N Rock Mr Adam "Shagger" Applegarth was not only shagging his lady friend in Buy to let, lending her £1 MN for her property portfolio and also sold every single fucking share in N Rock whilst telling everyone that everything in the garden was just fucking peachy.

Of course the "private internal enquiry" into events leading up to the August 9th debacle when they simply ran out of money and road remains that ... private.

paul said...

So finance pops the keys through number 11's letterbox, leaving all the unpaid bills blocking the door and the investment youth ripping out all the remaining fixtures and fittings...
Who do we hand the keys back to?

Anonymous said...

http://www.dailymail.co.uk/news/article-1135439/Pictured-Woman-received-Afghan-war-secrets-arrested-British-colonel.html

Anonymous said...

The slideshow is worth a look
http://www.nn.northropgrumman.com/bush/

Anonymous said...

Off topic.

Postman came across this,thought you might like to read it?...

http://tinyurl.com/ra962

Some things never change.

Anonymous said...

February 7, 2009

“Kissinger Sent to Russia to Cut New World Order Deal”

“It is yet another glaring example there is no difference between Bush, Obama, or anybody else anointed by the global elite to serve as presidential window dressing — the Daily Telegraph reports this morning that former Reichsminister of State and Rockefeller minion Henry Kissinger was dispatched by the Obama administration to talk with Russian president Dmitry Medvedev about reducing stockpiles of nuclear warheads.”

“The CFR, Trilateral Commission, and the Bilderbergers have one objective — to create world government under the guise of a New World Order”…

http://tinyurl.com/c4rsqj

The above is SPOT ON…I think.

Anonymous said...

"More important, the United States will successfully move eastward the gravity and frontline of its Europe defense, go on beefing up its military presence in the Baltic states and the central Asia region, and also raise its capability to contain Russia by stepping into the backyard of the former Soviet Union."...

http://tinyurl.com/babp38


The fight is on…

February 4, 2009. …”Kyrgyzstan says U.S. air base decision is final”…

http://tinyurl.com/d2eaa3

Feb 6, 2009…”Sources: U.S. considers base in Uzbekistan”…

http://tinyurl.com/d45ow6


The only way Russia will get a stalemate (the best they can do)is to take the USA to the edge of nuclear war,will they do that?.

Anonymous said...

07 Feb

'Russia sends fighter jets to Abkhazia'...

http://tinyurl.com/b5ssok

07 Feb

"EU, NATO disagree on Russia proposal"...

http://tinyurl.com/bej332

gyg3s said...

Similar to where has the money gone is; where has the gold gone?

We don't know who bought the BoE's gold when Moron decided to sell it.

Anonymous said...

February 2009

"President Blair: Former PM set to become EU chief as Sarkozy battles to win him the post" ...

http://tinyurl.com/c93d69


07th February 2009

"Secret police unit set up to spy on British 'domestic extremists'"

"A secret police intelligence unit has been set up to spy on Left-wing and Right-wing political groups.
The Confidential Intelligence Unit (CIU) has the power to operate across the UK and will mount surveillance and run informers on ‘domestic extremists’"

"Its job is to build up a detailed picture of radical campaigners."

"Targets will include environmental groups involved in direct action such as Plane Stupid, whose supporters invaded the runway at Stansted Airport in December."...

http://tinyurl.com/con87a



8 February 2009

"The government is compiling a database to track and store the international travel records of millions of Britons."

"The intelligence centre will store names, addresses, telephone numbers, seat reservations, travel itineraries and credit card details of travellers."...

http://tinyurl.com/adrbbc

Prepare for armageddon said...

We are in a War and nobody told us.
The Elites War on us all

S said...

The telegraph reports on 10/2/09 that Paul Moore (former head of risk at HBOS) was sacked for telling HBOS boss Sir James Crosby (now the deputy chairman of the Financial Services Authority) that the the bank's practices could "lead to disaster".

Moore was evidently not up to the task of plate spinnin'...

Anonymous said...

Moore's statements to the Treasury Select Committee are here.

Anonymous said...

"Sir James Crosby has resigned as deputy chairman of City watchdog, the Financial Services Authority (FSA)."

"The move follows allegations that, when head of HBOS, he sacked senior manager Paul Moore after raising concerns the bank was exposed to too much risk"...

http://tinyurl.com/bq4tlp

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