Sunday, August 3, 2008

Short Term bank borrowing reaches record highs.

Stressed banks borrow record amount from Fed

NEW YORK (Reuters) - Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll, while the commercial paper market continued to contract, signaling tough conditions for short term borrowers. Banks' primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed on Thursday. Clearly, the credit fiasco is far from over. Infact, it is still accellerating. At the moment, we are seeing increased borrowing, leading to inflation. Eventually, banks will refuse loans or be refused them. There could be a plateaux, but, after that point, we enter deflation and a currency death spiral.

Posted by planning4acrash @ 10:29 AM (603 views)
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5 thoughts on “Short Term bank borrowing reaches record highs.

  • Borrowing from the Fed is borrowing from taxpayers.
    Borrowing from taxpayers is making the taxpayer underwrite their business (or do the people get to do a credit check before lending?)

    This will destroy America’s economy.

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  • This July article is still relevant this week-end as we go into another new week of high borrowing. There must be a limit to the amount of cash the Fed can hand out, I would have thought.

    At what point does the Fed say “NO” ?

    Enormous losses by General Motors have set a landmark for results coming from US manufacturing companies. The losses need to be plugged, somehow. GM must be virtually insolvent – the Fed will need to help out in the weeks/months ahead.

    How will the Fed choose between those it helps and those who will go to the wall? I’m not an ardent fan of the NWO theory, but I’m willing to bet some favouritism will be taking place!

    All this will not help the US housing market to “bottom out” as it affects the availability of mortgages going forward into August. The ripple effects will be seen in the UK, and the UK housing market, of course.

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  • planning4acrash says:

    Alan, you are spot on. Whenever government, and the Fed, BOE & ECB are acting as surrogate socialist government, by offering secret bailouts (they choose who gets bailed and who has to bail out), whenever government gets involved in economic planning, it makes mis-judgements and creates more problems than it solves. Then it comes up with solutions to the problems it has caused. Why? Because government is above the market and market signals. Why? Because it prints the money. Why? Because we have a fiat money system that is not tied to market fundamentals.

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  • All this reminds me of the 1970’s especially the period 1974-1979, are we looking at economies (US/UK) that are the equivalent of British Leyland?

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  • planning4acrash says:

    The equivalent of the big manufacturers, are now the big financial institutions. They (government) destroyed manufacturing, replacing it with a service/financial industry. Now, they (government) are in the final stages of destroying the financial sector. I wish they’d (MP’s) would just sack the BOE, pull us back from overseas military, slash taxes, go on holiday, and let us, the people, solve the problems.

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