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The Emperors New Clothes

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About The Emperors New Clothes

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  1. Same data I've posted about before but in a chart. Bear in mind we are currently below zero... http://research.stlouisfed.org/fred2/serie...d=19&soid=1
  2. Spot on. How many of the banks are in a fit state to recapitalise the monolines? This is a link to the current, aggregate, reserves of US banks (depository institutions). This is the amount the banks have on deposit with the Federal Reserve banks or as cash in vaults. http://www.federalreserve.gov/releases/h3/Current/ The nonborrowed reserve amount that I am looking at is the amount of deposits held with the Federal Reserve banks plus cash in vaults less money that has been borrowed via the Federal Reserves discount window ( I assume this also includes via auction, which will be backed by collateral). The figure is for the banking system as a whole. The amount of nonborrowed reserves has dropped dramatically in the last month from $42 billion at the end of November to $27 billion at the end of December, $11 billion on January 2nd to a negative $1.3 billion (Seasonally adjusted a positive $200 million) on January 16th. I'm not sure what the negative nonborrowed amount implies, on the face of it, it seems that the banking system as a whole isn't meeting its (regulatory?) reserve requirements. Banks that are borrowing to fulfill their reserve requirements are not going to be bailing anyone out. One bit of good news; some banks are still running a cash surplus (approx. $19 billion in total) Again this is only my interpretation of this, if anyone knows better please put me straight.
  3. Two points as I see it 1. It’s not clear that $1 billion will be enough to maintain their ratings. Ambac were unable to raise the capital and has been downgraded. MBIA have been placed on negative watch for downgrades despite managing to raise the capital. Also Ambac lost over $3 billion last quarter. 2. If I’ve interpreted the data in the links I posted above correctly (hopefully I’m badly mistaken) then the US banks only have $200 million dollars that they haven’t borrowed from the Fed. I’m no expert on this by any means so take this with at least a pinch of salt; it’s my best interpretation of it.
  4. Your solution is effectively the US Government standing behind the loans - the US banks don't seem to have any available reserves to do this
  5. Further to this I've looked back at the history of the non-borrowed reserves. Nothing like this going back to 1959. http://www.federalreserve.gov/releases/h3/hist/h3hist1.txt
  6. Thanks for this link. They've moved on to talking about the non-borrowed reserves of the US banks (Page 18). Looks like the US banking system is resting on $200 million of non-borrowed reserves (or was on the 16th Jan) http://www.federalreserve.gov/releases/h3/Current/ Someone please tell me this isn't as terrifying as it looks.
  7. Isn't this where Warren Buffet is going to clean up? Although if Berkshire are the only game in town insurance costs are going to rocket. What are the chances of other entrants into this market?
  8. I'm guessing most of the $556 billion mentioned above is in municipal bonds. What's the current difference in value between a AAA rated municipal bond and a AA rated one? Is there an index online (similar to the ABX index)? Looking at the ABX indexes, Ambac insured mortgage backed securities look to have instantly lost between 11 and 31 cents on the dollar depending on when they were originated. (Someone correct me if I've got this wrong - I almost certainly have). Does anyone have any numbers on how much in mortgage backed securities Ambac is insuring? These losses will only grow if/when there is a fire sale.
  9. http://www.ft.com/cms/s/0/0b299f38-bfb5-11...00779fd2ac.html Last line says it all
  10. US Jobs Data released earlier - unemployment up to 5%
  11. MBIA down over 25% today after revealing massive exposure to sub-prime CDO's. http://uk.finance.yahoo.com/q/bc?s=MBI&amp...&q=l&c= http://www.reuters.com/article/gc06/idUSN2064099720071220 Very, very serious.
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