Bank Of England - Only Master Of The Universe

[Nationalist]

The ECB has pumped out £140bn in loans to the hedgies; the Fed opened the discount window and handed out the cash; the Bank of Japan did the same. But what did the Bank of England do? Absolutely nothing. No free cash, no nothing.

Why?

Is this masterly inaction? Crisis, what crisis? The BOE keeps its head as all around are losing theirs. Or was it a case of whoever blinks first has to pay out billions to save the world?

Remember, only on Thursday last week MK said he was not in the business of rescuing imprudent lenders.

I think MK may have saved us a lot of money. :respect:

[stuckmojo]

maybe they remained "vigilant", which means that they were asleep as always

[bubbleturbo]

Go and read the tuffers thread.

Nobody has "saved" anyone any money. It is all short term loans.

[Leonard Hatred]

maybe they remained "vigilant", which means that they were asleep as always

Haven't you heard? The MPC have been fitted with a "vigilance device" like on a train. Once a month a bleep sounds, and Merv wakes up again to trot out the usual shite.

[South Lorne]

The ECB has pumped out £140bn in loans to the hedgies; the Fed opened the discount window and handed out the cash; the Bank of Japan did the same. But what did the Bank of England do? Absolutely nothing. No free cash, no nothing.

Why?

Is this masterly inaction? Crisis, what crisis? The BOE keeps its head as all around are losing theirs. Or was it a case of whoever blinks first has to pay out billions to save the world?

Remember, only on Thursday last week MK said he was not in the business of rescuing imprudent lenders.

I think MK may have saved us a lot of money. :respect:

...yep...but ..it is partly our Euro net contribution that is being flushed away by the ECB, probably to save net recipient countrys' Banks

.....

[Timm]

The BOE keeps its head as all around are losing theirs.

Remember, only on Thursday last week MK said he was not in the business of rescuing imprudent lenders.

Does the BoE not offer an always available "safety valve", of available lending that would allow it a few days of wait and see? If the turmoil continues, it will no doubt have to catch up with the ECB by offering unlimited availability to all bids. I say this in spite of my deluded hope that Merv is trying to push sterling up for a time so he can buy back some of Gordon's Gold before it's value shoots up again.

[AvidFan]

Go BoE!

See, Eddy George was wrong - the economic bubble caused by lying about inflation, keeping interest rates artifically low and increasing public spending CAN be sustained with ABSOLUTELY NO ILL EFFECTS.

I think the FED and the ECB should look to King and Brown to see how it's done.

Rule Britannia, Britannia rules the (elliott) waves!

[adren]

Go and read the tuffers thread.

Nobody has "saved" anyone any money. It is all short term loans.

I mught be wrong, but the cynic in me kinda believes this:

Oiling the cogs just enough to ensure all the sh1t rolls down hill.

The problem at the moment is that rich people and institutions are holding all the toxic waste.

They need a "breathing space" to offload it onto the poor schmucks lower down the food chain.

Another query -

The ECB poured in 50Bn EU on Friday for repayment today.

So today's announcement - what was it 60Bn? - that's not necessarily all "new" money then?

Is it?

Please help me get my head around this.

If I loaned my mate £20 on Friday night and wanted it back Monday morning but on Monday morning got my £20 back but then right away lent him another £30 then - - - ?

[thermo]

Does the BoE not offer an always available "safety valve", of available lending that would allow it a few days of wait and see?

I don't know if I read it on here or whethere it was on the news, but the BOE does offer loans like the EU bank did, but at 1% above base rates, and not cheaper (at base rate) like the EU central bank. So if it does get takers, it will immediately become obvious which bank/financial corp. is really that desperate.

[ScaredEitherWay]

I don't know if I read it on here or whethere it was on the news, but the BOE does offer loans like the EU bank did, but at 1% above base rates, and not cheaper (at base rate) like the EU central bank. So if it does get takers, it will immediately become obvious which bank/financial corp. is really that desperate.

Yes.

[harris]

the 1% above base rate loan is how the BoE does it.

There is not much point offering funds at base rate like the other central banks are doing as all that happends is that everyone piles in and takes the cheap money whether they need it or not.

[Nicholas Cage]

I thought is was 250 Billion Euros total according to the BBC

The European Central Bank (ECB) was the first to make the move - releasing 95bn euros on Thursday, before injecting another 61bn euros a day later, and now an extra 48bn euros.

95bn Euro

61bn Euro

48bn Euro

Japan's central bank injected an initial one trillion yen ($8.5bn; £4.2bn) into the financial system last week, before adding an additional 600bn yen on Monday.

6.1bn Euro

Most importantly, the US Federal Reserve intervened twice on Friday, pumping $38bn into the banking system.

27.8bn Euro

I've learnt from hpc that these are actually contracts and not all of them were sold, but the continued release seems to mean there is a great demand for them when banks won't lend to each other.

[Timm]

Does the BoE not offer an always available "safety valve", of available lending that would allow it a few days of wait and see?

the 1% above base rate loan is how the BoE does it.

There is not much point offering funds at base rate like the other central banks are doing as all that happends is that everyone piles in and takes the cheap money whether they need it or not.

Thanks guys.

[crash2006]

the 1% above base rate loan is how the BoE does it.

There is not much point offering funds at base rate like the other central banks are doing as all that happends is that everyone piles in and takes the cheap money whether they need it or not.

yep what i said on thursday there must have been a few out there.

[Bobajobbob]

The ECB have not added €250billion in total.

The repos are all only for one day. Each day they lend the cash and take government bonds in return. The next day the bonds and the cash are handed back.

For those interested

The transaction is something like this using an Italian government bond as an example and with no Haircut (overcollateralisation of loan)

BTPs 3% 15/01/10

Spot Price - 96.94 (cash bond traded price)

Repo rate - 4.05%

Nominal Amount = 100m (amount of bonds)

Start Date 14/08/07

End Date 15/08/07

Accrued Interest - 0.24457 (Bond Coupon)

Dirty Price = Spot Price + Accrued Int = 97.18457000

Settlement Cash = Nominal x Dirty Price = 97'184'570

So in return for their 100m of this bond the investment bank will receive in return €97'184'570m however the very next day they must repay it plus an additional €10,933.26 in interest. (4.05%x1/360x97'184'570)

Fascinating stuff I am sure you will agree.

[Guest DissipatedYouthIsValuable]

Haven't you heard? The MPC have been fitted with a "vigilance device" like on a train. Once a month a bleep sounds, and Merv wakes up again to trot out the usual shite.

Are you, in fact, a train?

[Justice]

The FED and ECB may just be a bit more honest than the BoE and our BoE could be using some type of PPP scam to feed money into the markets.

If you beleive the offical inflation figures then you need to put the brain in gear before driving.

Want to understand the 'masters' then see Money Masters on google video and note the bit that says the BoE controls the FED.

[bubbleturbo]

The ECB have not added €250billion in total.

The repos are all only for one day. Each day they lend the cash and take government bonds in return. The next day the bonds and the cash are handed back.

For those interested

The transaction is something like this using an Italian government bond as an example and with no Haircut (overcollateralisation of loan)

BTPs 3% 15/01/10

Spot Price - 96.94 (cash bond traded price)

Repo rate - 4.05%

Nominal Amount = 100m (amount of bonds)

Start Date 14/08/07

End Date 15/08/07

Accrued Interest - 0.24457 (Bond Coupon)

Dirty Price = Spot Price + Accrued Int = 97.18457000

Settlement Cash = Nominal x Dirty Price = 97'184'570

So in return for their 100m of this bond the investment bank will receive in return €97'184'570m however the very next day they must repay it plus an additional €10,933.26 in interest. (4.05%x1/360x97'184'570)

Fascinating stuff I am sure you will agree.

Thanks for that.

There certainly is a lot of misinformation surrounding this current hubris. A lot of people are talking about "hyperinflation", "printing money", "bail outs" and so forth, when that is not the case at all.

In fact, look at the New York Feds discount window operations today:

http://www.newyorkfed.org/markets/omo/dmm/...m?SHOWMORE=TRUE

€53BN requested by banks - 1 day repo.

ONLY €2BN approved by NY Fed.

[crash2006]

I thought is was 250 Billion Euros total according to the BBC

The European Central Bank (ECB) was the first to make the move - releasing 95bn euros on Thursday, before injecting another 61bn euros a day later, and now an extra 48bn euros.

95bn Euro

61bn Euro

48bn Euro

Japan's central bank injected an initial one trillion yen ($8.5bn; £4.2bn) into the financial system last week, before adding an additional 600bn yen on Monday.

6.1bn Euro

Most importantly, the US Federal Reserve intervened twice on Friday, pumping $38bn into the banking system.

27.8bn Euro

I've learnt from hpc that these are actually contracts and not all of them were sold, but the continued release seems to mean there is a great demand for them when banks won't lend to each other.

95bn Euro thursday

61bn Euro friday

so on friday they had 95+61.

Thursdays was a 2 week loan i think i heard this on reuters.

friday was a repo.

monday the ECB took out 61+interest and pumped in 47.7BN next time it will be around 34BN pumped in and 47.7 + interest taken out till 0BN is pumped in, the point is no one has picked up on the 95BN given on thursday thats still out there.

So in 2 weeks we are back in square one, unless this 95BN euros some how disappears.

Edited August 13, 2007 by crash2006

[OzzMosiz]

Are they doing this to let their masters bail out?

[stuckmojo]

Are they doing this to let their masters bail out?

yes they are.

[alabala]

http://business.timesonline.co.uk/tol/busi...icle2253693.ece

From The Times

August 14, 2007

Reassurance on unlimited credit facility from Bank of England

[Bobajobbob]

95bn Euro thursday

61bn Euro friday

so on friday they had 95+61.

Thursdays was a 2 week loan i think i heard this on reuters.

friday was a repo.

monday the ECB took out 61+interest and pumped in 47.7BN next time it will be around 34BN pumped in and 47.7 + interest taken out till 0BN is pumped in, the point is no one has picked up on the 95BN given on thursday thats still out there.

So in 2 weeks we are back in square one, unless this 95BN euros some how disappears.

Sorry but you are wrong. All three extraordinary Repos were one business day in duration. The Friday Overnight was 3 calendar days because of the w/e. The ECB has regular 2 week repos that are simply part of their normal liquidity management operations, they take place every month and you can see the calendar on the the ECB website. The last one if I am not mistaken was a few days before the crisis blew up for €290billion.

The only difference in the 3 operations was that the first was at a fixed rate of 4.00% whereas the others had a minimum rate of 4.00% and banks could bid higher.

[LargelyIgnorant]

The Bank of England doesn't need to act. They use a different system.

Reassurance on unlimited credit facility from Bank of England

The Bank of England broke its silence on the growing credit crisis for the first time yesterday by reassuring markets that banks could borrow from its unlimited credit facility if they need to increase liquidity.

There is an 'unlimited' BOE borrowing facility available. This differs from the other CBs in that they charge a higher rate of interest. The loans are always available, but I guess that international FIs do a CB carry trade and borrow off the ECB at lower rates.