Harold Bishop Posted February 7, 2008 Share Posted February 7, 2008 Ok, I'll post it.This lot has been doing the rounds today... Part 1 Part 2 Part 3 Thats a good post. The US banks non-borrowed reserves have gone negative in Dec 2007. This event is unprecedented in all the Fed data since 1959. Fractional lending in negative territory and the Fed is putting in the liquidity to support the banks. So, where have the non borrowed reserves gone ? Will they come back ? How much more money has the Fed got to continue providing liquidity ? And, where does the Fed get the money for this liquidity ? The guy from Greenrush capital asks these questions but doesn't answer them. Anyone here know ? Quote Link to comment Share on other sites More sharing options...
markinspain Posted February 7, 2008 Author Share Posted February 7, 2008 (edited) Ok, I'll post it.This lot has been doing the rounds today... Part 1 Part 2 Part 3 I have no idea who these guys are, but I'll post it anyway. Could be cobblers. Wow great find TW11! F*** Me. Looks like old Cgnao is right, although I wish he'd posted these links. The balance sheet from the Fed at the end of Part 1 looks "a bit disturbing"!!! as the bloke on the commentary said. Edited February 7, 2008 by markinspain Quote Link to comment Share on other sites More sharing options...
Gone baby gone Posted February 7, 2008 Share Posted February 7, 2008 (edited) Thats a good post. The US banks non-borrowed reserves have gone negative in Dec 2007. This event is unprecedented in all the Fed data since 1959. Fractional lending in negative territory and the Fed is putting in the liquidity to support the banks. So, where have the non borrowed reserves gone ? Will they come back ? How much more money has the Fed got to continue providing liquidity ? And, where does the Fed get the money for this liquidity ? The guy from Greenrush capital asks these questions but doesn't answer them. Anyone here know ? Good find indeed. So, the bank of banks is almost bankrupt?! This is the link to the Fed's stats that the presentation showed: http://www.federalreserve.gov/releases/h3/Current/ The interesting bit is "2008-Jan." at the bottom showing the non-borrowed reserves going from +$40 Billion to -$8 Billion, which is unprecedented (it's that word again). I guess the bigger question is, where did the money go? Also, how can fractional reserve banking 'work' with a negative reserve? Edited February 7, 2008 by redalert Quote Link to comment Share on other sites More sharing options...
Injin Posted February 7, 2008 Share Posted February 7, 2008 (edited) Good find indeed. So, the bank of banks is almost bankrupt?! This is the link to the Fed's stats that the presentation showed: http://www.federalreserve.gov/releases/h3/Current/ The interesting bit is "2008-Jan." at the bottom showing the non-borrowed reserves going from +$40 Billion to -$8 Billion, which is unprecedented (it's that word again). I guess the bigger question is, where did the money go? Also, how can fractional reserve banking 'work' with a negative reserve? Easy. I give you £1 You lend it to 93 people and put £93 worth of "assets" on your books. I remove my £1. You are fooked. Edited February 7, 2008 by Injin Quote Link to comment Share on other sites More sharing options...
Gone baby gone Posted February 7, 2008 Share Posted February 7, 2008 You are fooked. Yes, I only have a limited grasp of the art of Economics, but that's what I was thinking too... Quote Link to comment Share on other sites More sharing options...
Guest grumpy-old-man Posted February 7, 2008 Share Posted February 7, 2008 Ok, I'll post it.This lot has been doing the rounds today... Part 1 Part 2 Part 3 I have no idea who these guys are, but I'll post it anyway. Could be cobblers. Hi TW11, what a great find, cheers. I have seen similar stuff to this but nothing as good as this. Those FED balance sheets are scary but expected from what I have previously read. It just seems strange seeing it all in 3 vids, makes it sink it that bit further imo. Unprecidented figures eh...... Quote Link to comment Share on other sites More sharing options...
eightiesgirly Posted February 7, 2008 Share Posted February 7, 2008 Good find indeed. So, the bank of banks is almost bankrupt?! This is the link to the Fed's stats that the presentation showed: http://www.federalreserve.gov/releases/h3/Current/ The interesting bit is "2008-Jan." at the bottom showing the non-borrowed reserves going from +$40 Billion to -$8 Billion, which is unprecedented (it's that word again). I guess the bigger question is, where did the money go? Also, how can fractional reserve banking 'work' with a negative reserve? I think the money went to keep the banks solvent, trouble is what happens now if they have to take more losses back on the books? Quote Link to comment Share on other sites More sharing options...
redgenieuk Posted February 7, 2008 Share Posted February 7, 2008 Easy. I give you £1 You lend it to 93 people and put £93 worth of "assets" on your books. I remove my £1. You are fooked. So if I remove my 70K from HSBC, they arer propper fooked?! Quote Link to comment Share on other sites More sharing options...
Woot Posted February 7, 2008 Share Posted February 7, 2008 Ok, I'll post it.This lot has been doing the rounds today... Part 1 Part 2 Part 3 I have no idea who these guys are, but I'll post it anyway. Could be cobblers. Thanks TW11 - and how nice to see someone supporting their post with evidence! TD Quote Link to comment Share on other sites More sharing options...
Gone baby gone Posted February 7, 2008 Share Posted February 7, 2008 I think the money went to keep the banks solvent, trouble is what happens now if they have to take more losses back on the books? You're probably right, but they have been writing down for months and managed to leave this unborrowed reserve figure untouched. I guess they are really sailing close to the wind now, their lines of credit are maxxed out and they need every cent they can get. Is someone in the U.S. hiding a huge unannounced write down? Quote Link to comment Share on other sites More sharing options...
eightiesgirly Posted February 7, 2008 Share Posted February 7, 2008 You're probably right, but they have been writing down for months and managed to leave this unborrowed reserve figure untouched. I guess they are really sailing close to the wind now, their lines of credit are maxxed out and they need every cent they can get. Is someone in the U.S. hiding a huge unannounced write down? I think it's more likely to be a U.k. bank. I think the telegraph had something on it, I'll try to find it. This is what happens I suppose when models have to perform in the real world. They don' t seem to take account of the 'human element' . Either way, this wole thing seems a real tanglemess indeed. Quote Link to comment Share on other sites More sharing options...
Injin Posted February 7, 2008 Share Posted February 7, 2008 So if I remove my 70K from HSBC, they arer propper fooked?! They would have to write a vast multiple more than that off, yes. Quote Link to comment Share on other sites More sharing options...
eightiesgirly Posted February 7, 2008 Share Posted February 7, 2008 http://www.telegraph.co.uk/money/main.jhtm...C-mostviewedbox Hope this works O.K. Quote Link to comment Share on other sites More sharing options...
Gone baby gone Posted February 7, 2008 Share Posted February 7, 2008 http://www.telegraph.co.uk/money/main.jhtm...C-mostviewedboxHope this works O.K. Yep, I saw that - I don't think a UK banks problem would show up at the Federal Reserve though? Quote Link to comment Share on other sites More sharing options...
eightiesgirly Posted February 7, 2008 Share Posted February 7, 2008 Yep, I saw that - I don't think a UK banks problem would show up at the Federal Reserve though? No indeed not, but it begs the question is the BOE and the ECB in the same situation, they seem to have done even more jiggery pokery than the fed. Quote Link to comment Share on other sites More sharing options...
Gone baby gone Posted February 7, 2008 Share Posted February 7, 2008 No indeed not, but it begs the question is the BOE and the ECB in the same situation, they seem to have done even more jiggery pokery than the fed. If I was a gambling man I would put my money on Citibank in the US. In the UK, who knows..? I know RBS have a mystery £10 Billion hole, maybe we can find the ECB reserve figures. Quote Link to comment Share on other sites More sharing options...
Guest Skint Academic Posted February 7, 2008 Share Posted February 7, 2008 If you can't be bothered wading through the vids then this update is worthwhile reading. If only for the first chart. http://www.greenrushcapital.com/greenrush_fed2.pdf (The vids are worthwhile watching as well though) Quote Link to comment Share on other sites More sharing options...
Guest Skint Academic Posted February 7, 2008 Share Posted February 7, 2008 I know RBS have a mystery £10 Billion hole, maybe we can find the ECB reserve figures. Does this mean that they might start asking for overdrafts to be repaid if things get really bad? Quote Link to comment Share on other sites More sharing options...
eightiesgirly Posted February 7, 2008 Share Posted February 7, 2008 If I was a gambling man I would put my money on Citibank in the US. In the UK, who knows..? I know RBS have a mystery £10 Billion hole, maybe we can find the ECB reserve figures. This is insane, we are trying to look at the CENTRAL BANKS figures with an eye to what amounts to being insolvent. I can't believe this is even happening,and we are an interested few. The average Joe probably has no idea about any of this at all. Quote Link to comment Share on other sites More sharing options...
Harold Bishop Posted February 7, 2008 Share Posted February 7, 2008 Does this mean that they might start asking for overdrafts to be repaid if things get really bad? Possibly. Most overdrafts are "Repable on Demand". ie. in full. Quote Link to comment Share on other sites More sharing options...
Gone baby gone Posted February 7, 2008 Share Posted February 7, 2008 Does this mean that they might start asking for overdrafts to be repaid if things get really bad? I doubt it - the only loans, etc they are likely to 'call in' are the ones they think are likely to default. The rest are making them money in the form of interest payments. Notice that when egg cancelled cards, the people affected were those with no debts and those with big debts and a high risk of default. The people carrying a debt but making regular payments are the banks best customers. Quote Link to comment Share on other sites More sharing options...
A.steve Posted February 7, 2008 Share Posted February 7, 2008 Possibly. Most overdrafts are "Repable on Demand". ie. in full. I vaguely remember that corporate overdrafts were repayable on demand in the 90s slump... and if the bank did this, the company was finished - usually. Those in the know often said that the company was solvent - but, because everyone else was in trouble, they had cash-flow problems. If we are to attribute something to cgnao that is unprecedented, I think it has to be that the Bank of England is now a nationalised company... in order to get around EU rules about state aid to commercial organisations (Northern Rock). Quote Link to comment Share on other sites More sharing options...
eightiesgirly Posted February 7, 2008 Share Posted February 7, 2008 I vaguely remember that corporate overdrafts were repayable on demand in the 90s slump... and if the bank did this, the company was finished - usually. Those in the know often said that the company was solvent - but, because everyone else was in trouble, they had cash-flow problems.If we are to attribute something to cgnao that is unprecedented, I think it has to be that the Bank of England is now a nationalised company... in order to get around EU rules about state aid to commercial organisations (Northern Rock). What's the significance of the BOE being a nationalised company. Quote Link to comment Share on other sites More sharing options...
Injin Posted February 7, 2008 Share Posted February 7, 2008 (edited) What's the significance of the BOE being a nationalised company. It isn't. Tha bank of england owns the government. Edited February 7, 2008 by Injin Quote Link to comment Share on other sites More sharing options...
A.steve Posted February 7, 2008 Share Posted February 7, 2008 What's the significance of the BOE being a nationalised company. :-S I think I used the wrong terminology... This explains better than I did. http://uk.reuters.com/article/businessNews...786998820080207 Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.