Thursday, Mar 13, 2008
How much further can the central banks go to support a system that is so obviously broken?
The Telegraph: The Fed's in a desperate race with spectre of collapse
We have not seen anything like it since the decade of the Great Depression. Melodramatic as that might sound, it is a fact but a fact that markets seem unwilling to accept. While the Fed is willing to slash rates and hope, and pump liquidity into the system, markets will remain optimistic. But it is a race to the bottom. The Fed hoping it reaches the finishing line first and restores confidence returns before a bank goes bust. But the spectre of a collapse is neck and neck with Bernanke and it's still anyone's guess which will win.
Posted by sold 2 rent 1 @ 08:36 AM (396 views) Add Comment
4 Comments
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1. sold 2 rent 1 said...
Martin Armstrong model says crash either pre or post Easter
2. happyrenterz said...
It's still about mortgages according to this opinion
"This is the best explanation I have seen as to why the Fed set up the TSLF, and allowed it to accept less than stellar paper:
"The real problem began in late February, as several of Wall Street's biggest investment banks prepared to close their books for the quarter and realized they were looking not only at big declines in profit from issuance of new stocks and bonds and fees from mergers and acquisitions, but also another round of write-offs in the value of their holdings. In response, the banks began to hunker down, instructing their trading desks to raise margin requirements for hedge funds and other customers, requiring them, in effect, to post more collateral on their heavy borrowings.
Thus began a chain reaction in which hedge funds began selling what they could -- largely mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae -- to raise the cash to meet their new margin calls. ...
By accepting AAA-rated mortgage-backed securities as collateral for the loans, the Fed aimed to restore confidence and trading in that beleaguered market and begin to put a floor under prices."
"
http://bigpicture.typepad.com/comments/2008/03/why-the-fed-bai.html
3. wdbeast said...
s2r1 - Go and watch youtube all day if you enjoy being indoctrinated by others.
Iv'e had enough of this rubbish.
Webmaster, I'm off, this blog is spouting very dangerous attitudes from fringe elements.
4. sold 2 rent 1 said...
happyrenterz,
Nice find.