Comments on: Are Central Bankers Providing Needed Liquidity or Capitulating? (ECB Intervention Edition) http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed.html Sun, 22 Nov 2009 15:18:28 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: NC Jim http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed.html#comment-2517 NC Jim Wed, 19 Dec 2007 02:41:00 +0000 http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed-liquidity-or-capitulating-ecb-intervention-edition/#comment-2517 How can a CB offer "unlimited liquidity"? Pardon by ignorance but I thought a central bank had a balance sheet capitalized with assets from member banks that they could loan against. Is this just virtual printing press activity? Unlimited surely doesn't mean infinite - or does it?<br/><br/>This is probably ECON-101 but I slept through that class - boring to tears. How can a CB offer “unlimited liquidity”? Pardon by ignorance but I thought a central bank had a balance sheet capitalized with assets from member banks that they could loan against. Is this just virtual printing press activity? Unlimited surely doesn’t mean infinite – or does it?

This is probably ECON-101 but I slept through that class – boring to tears.

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed.html#comment-2510 Yves Smith Tue, 18 Dec 2007 20:56:00 +0000 http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed-liquidity-or-capitulating-ecb-intervention-edition/#comment-2510 Anon of 11:54 AM,<br/><br/>Agreed the point isn't clear. It's worrying that the banks and investment banks themselves don't worry much about the 2-3 year time horizon, or even longer. Anon of 11:54 AM,

Agreed the point isn’t clear. It’s worrying that the banks and investment banks themselves don’t worry much about the 2-3 year time horizon, or even longer.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed.html#comment-2508 Anonymous Tue, 18 Dec 2007 20:09:00 +0000 http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed-liquidity-or-capitulating-ecb-intervention-edition/#comment-2508 I guess that is what greenspan was doin...a long series of gaffes that created a debt induced haze. Sure pople got rich and even more think they are rich (at least that is what they belive there house tells them). Everyone is a genius. <br/><br/>moronic. The Fed is using the balance sheet of the United States. I know the governement usually just makes things up, but you don't "fix" solvency issues. You either restructure or go out of business. You don't debase your (or should I say our) balance sheet to prolong the pain. <br/><br/>What we need is an ACLU to monitor the Fed, that is if we can't abolish it. Greenspan should be put in jail right next to Ebbers and the Enron gang. All part of the same tape. Bernanke is teetering on the brink. <br/><br/>Disgrace I guess that is what greenspan was doin…a long series of gaffes that created a debt induced haze. Sure pople got rich and even more think they are rich (at least that is what they belive there house tells them). Everyone is a genius.

moronic. The Fed is using the balance sheet of the United States. I know the governement usually just makes things up, but you don’t “fix” solvency issues. You either restructure or go out of business. You don’t debase your (or should I say our) balance sheet to prolong the pain.

What we need is an ACLU to monitor the Fed, that is if we can’t abolish it. Greenspan should be put in jail right next to Ebbers and the Enron gang. All part of the same tape. Bernanke is teetering on the brink.

Disgrace

]]> By: Anonymous http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed.html#comment-2506 Anonymous Tue, 18 Dec 2007 16:54:00 +0000 http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed-liquidity-or-capitulating-ecb-intervention-edition/#comment-2506 "Central bankers look out over a longer forecast range than many of the players they regulate (a worrying condition in and of itself)"<br/><br/>Why is this worrying? “Central bankers look out over a longer forecast range than many of the players they regulate (a worrying condition in and of itself)”

Why is this worrying?

]]> By: s http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed.html#comment-2505 s Tue, 18 Dec 2007 15:21:00 +0000 http://www.nakedcapitalism.com/2007/12/are-central-bankers-providing-needed-liquidity-or-capitulating-ecb-intervention-edition/#comment-2505 While everyone is focusing on the short term "fix" for the banks, folks are simply whistling past the graveyard (hedge/pension/PE complex) which owns the vast majority of the securitizations manufactured over the past five years. The housing boom really bgan to take lift in 1998, not the 2005 that we hear about so frequently. I digress. That said, why is it that everyone is so worried about the banks that actually have at least some sort of capital cushion, while the other side of the trade (the majority of the problem) sits rotting on balance sheets across the world. The Fed by degrading its own balance sheet is engaging in an Enron like scan to tak on bad debt and allow this dead wood to remain hidden out of view. Americans should be disgusted that the Central Bank - of course for the "greater" good, kind of like all those "free" trade deals - is perverting the nations balance sheet to arrest the free hand and necessary correction. The notion that somehow pushing the horizon out further will make it more orderly is preposterous; it is increasing the systemic risk as excess builds in new places and those underwater are incented to take undue new risk to make up lost ground. In behavioral financial lingo they call it risk seeking behavior. The Fed is engaged in a high wire act that will end badly. The debate about recession is almost comical: are these people paying attention? The notion that the US economy is somehow going to return to 3+% growth rates is simply delusional thinking. Do these people get that the growth in the US was leveraged growth: the analogy is the leverage finance bust in the late 80s, not '98. Yeah we will grow at above trend line forever, yeah that right (as the character say on SNL)<br/>The implications of returning to anywhere near the 3+% growth for the US are dire and the fed knows it. The economy was artificially inflated via gov spending and 0% financing with the Fed in cahoots masking inflation so "who knew." We will know there is capitulation when Cramer's show is canceled and CNBC goes out of business when they can't find some buy side hack to come on and tell us how cheap stocks are based on the past ten years? Last time I checked, stagflation yielded a mid single digit multiple. <br/><br/>There is an article in the FT speaking about the FHLB talking about the unlimited amount of lending it is prepared to do, so long as people are willing to buy its debt.<br/><br/>Scary times indeed While everyone is focusing on the short term “fix” for the banks, folks are simply whistling past the graveyard (hedge/pension/PE complex) which owns the vast majority of the securitizations manufactured over the past five years. The housing boom really bgan to take lift in 1998, not the 2005 that we hear about so frequently. I digress. That said, why is it that everyone is so worried about the banks that actually have at least some sort of capital cushion, while the other side of the trade (the majority of the problem) sits rotting on balance sheets across the world. The Fed by degrading its own balance sheet is engaging in an Enron like scan to tak on bad debt and allow this dead wood to remain hidden out of view. Americans should be disgusted that the Central Bank – of course for the “greater” good, kind of like all those “free” trade deals – is perverting the nations balance sheet to arrest the free hand and necessary correction. The notion that somehow pushing the horizon out further will make it more orderly is preposterous; it is increasing the systemic risk as excess builds in new places and those underwater are incented to take undue new risk to make up lost ground. In behavioral financial lingo they call it risk seeking behavior. The Fed is engaged in a high wire act that will end badly. The debate about recession is almost comical: are these people paying attention? The notion that the US economy is somehow going to return to 3+% growth rates is simply delusional thinking. Do these people get that the growth in the US was leveraged growth: the analogy is the leverage finance bust in the late 80s, not ‘98. Yeah we will grow at above trend line forever, yeah that right (as the character say on SNL)
The implications of returning to anywhere near the 3+% growth for the US are dire and the fed knows it. The economy was artificially inflated via gov spending and 0% financing with the Fed in cahoots masking inflation so “who knew.” We will know there is capitulation when Cramer’s show is canceled and CNBC goes out of business when they can’t find some buy side hack to come on and tell us how cheap stocks are based on the past ten years? Last time I checked, stagflation yielded a mid single digit multiple.

There is an article in the FT speaking about the FHLB talking about the unlimited amount of lending it is prepared to do, so long as people are willing to buy its debt.

Scary times indeed

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