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View Full Version : Here Comes The Global, US-Funded Liquidity Bail Out



Tylerdurden
11-30-2011, 07:49 AM
As expected, the Fed has just bailed out the world once again:


FED, ECB, BOJ, BOE, SNB, BANK OF CANADA LOWER SWAP RATES - BBG
ECB, FED other major central bank to lower the pricing of existing USD liquidity swaps by 50BPS

And as we have been writing every single day, the worldwide dollar crunch is now confirmed:


At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar

And finally, a promise to bailout Bank of America when it hits $4.00 again:


U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.

This means that the global situation is far, far more dire than the talking heads have said. Luckily, when this step fails, which it will, Mars can always come and bail us out.
For release at 8:00 a.m. EDT The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.
These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.
As a contingency measure, these central banks have also agreed to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant. At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise. These swap lines are authorized through February 1, 2013.
Federal Reserve Actions
The Federal Open Market Committee has authorized an extension of the existing temporary U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank through February 1, 2013. The rate on these swap arrangements has been reduced from the U.S. dollar OIS rate plus 100 basis points to the OIS rate plus 50 basis points. In addition, as a contingency measure, the Federal Open Market Committee has agreed to establish similar temporary swap arrangements with these five central banks to provide liquidity in any of their currencies if necessary. Further details on the revised arrangements will be available shortly.
U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.
Information on Related Actions Being Taken by Other Central Banks
Information on the actions to be taken by other central banks is available on the following websites:
Bank of Canada (http://www.bank-banque-canada.ca/en/index.html)
Bank of England (http://www.bankofengland.co.uk/)
Bank of Japan (http://www.boj.or.jp/en/)
European Central Bank (http://www.ecb.int/home/html/index.en.html)
Swiss National Bank (http://www.snb.ch/)
Frequently Asked Questions: Foreign Currency Liquidity Swaps (http://www.federalreserve.gov/monetarypolicy/bst_swapfaqs.htm)

http://www.zerohedge.com/news/here-comes-global-liquidity-bail-out

RonW
11-30-2011, 08:41 AM
All these bailouts are concentrating the wealth at the top, and is making the greatest income in-equality since
the great depression, which was just before the stock markets crashed then.

Also in the last few days it is coming to light that during the 08 and 09 banker bailouts that the federal reserve
actually pumped out in cheap money all over the world $7.7.trillion dollars, not the measly $800 billion
that we where led to believe. And this information is due to Ron Paul's questioning of the federal reserve
in his committee chairmanship.

I also ponder with all this money if the elite are actually trying to go for the one world currency,
but low and behold it will be the american dollar which no one expected..

John of Phoenix
11-30-2011, 08:54 AM
Are you familiar with how the Long-Term Capital Management crisis was resolved? This looks very similar - unwind the mess in a coordinated effort over several years.

I wonder if the rest of the world will hold their bankers responsible for the mess they created or, like the US, get tricked into giving them multi-million $$ bonuses for taking us to the brink of a major depression.

RodSBT
11-30-2011, 09:00 AM
BEN! I need more power!.....


Caapton. I'm givin it all shes got....The presses are roonin as Fast as they caan ...but the dilithium crystals... they're are burnin red hot...

I don't think she'll hold togetherrrrrr!!!!!!!










...will the insanity ever end.

Waddie
11-30-2011, 09:04 AM
All these bailouts are concentrating the wealth at the top, and is making the greatest income in-equality since
the great depression, which was just before the stock markets crashed then.

Also in the last few days it is coming to light that during the 08 and 09 banker bailouts that the federal reserve
actually pumped out in cheap money all over the world $7.7.trillion dollars, not the measly $800 billion
that we where led to believe. And this information is due to Ron Paul's questioning of the federal reserve
in his committee chairmanship.

I also ponder with all this money if the elite are actually trying to go for the one world currency,
but low and behold it will be the american dollar which no one expected..


And almost half of that 7.7 went to foreign banks.

What I don't understand is that all of this debt was insured by CDS's, a type of derivative. So let them default, in which case shouldn't these policies then pay out? Why put the taxpayer on the hook? Or are we really protecting the owners of the policies?

regards,
Waddie

RonW
11-30-2011, 09:04 AM
Update- today the dow jones is up 400 points in the first 1/2 hour, as it also jumped 300 points the other day.
The story was going to be today that S&P downgrade of the banks, but not so now.
Bottom line these bastards already had it worked out..

Meanwhile bernake thinks the banks are in a liquidity shortage, (not trap) and keeps pumping them money.
They love it and keep siphoning it off in bonuses and bad debt rearrangement, then with the excess
they turn around and buy T-bills..and again this is why government deficit spending does matter,
it is sucking the life out of the economy.

RodSBT
11-30-2011, 09:10 AM
And almost half of that 7.7 went to foreign banks.

What I don't understand is that all of this debt was insured by CDS's, a type of derivative. So let them default, in which case shouldn't these policies then pay out? Why put the taxpayer on the hook?

regards,
Waddie

You're expecting good intentions and that isn't reality. The whole point of fiat currencies is to pass the "buck".
And besides, how can you insure something that has been leveraged 100 to 1 with any assurance it's a safe bet?

Waddie
11-30-2011, 09:11 AM
Meanwhile bernake thinks the banks are in a liquidity shortage, (not trap) and keeps pumping them money.
They love it and keep siphoning it off in bonuses and bad debt rearrangement, then with the excess
they turn around and buy T-bills..and again this is why government deficit spending does matter,
it is sucking the life out of the economy.

+1. Liquidity trap is exactly what they're in. Considering they've pretty much quit paying interest on big deposits, the T-Bills are a good play, just not so good for business in general.

regards,
Waddie

Waddie
11-30-2011, 09:14 AM
You're expecting good intentions and that isn't reality. The whole point of fiat currencies is to pass the "buck".
And besides, how can you insure something that has been leveraged 100 to 1 with any assurance it's a safe bet?

The fact is, though, they did insure these loans. How do they manage to get off without paying out, at taxpayer expense? Is there anybody out there looking after the interests of taxpayers?

regards,
Waddie

RonW
11-30-2011, 09:22 AM
What I don't understand is that all of this debt was insured by CDS's, a type of derivative. So let them default, in which case shouldn't these policies then pay out? Why put the taxpayer on the hook? Or are we really protecting the owners of the policies?

To add to rod's statement...A derivative is something that is derived from, such as a default derivative on a home mortgage.
What these bankers did, is when they made a subprime loan, they included in the package (that most homeowners didn't
even understand ) a default insurance policy, to pay off the lender if the borrower failed to pay and defaulted.
They charged like a extra $50. a month for this default derivative and pocketed that $50.
Problem is they sold a lot of these default derivatives and never did have the money to pay off if they actually defaulted.
Under the glass-steagall act this was mixing insurance and banking and was not allowed.
With all the deregulation the bakers had a field day, now they are facing bankruptcy and helicopter bernake
keeps bailing them out, because we now know they are too big to fail...

----oh yea there is one guy out there looking out for the tax payers, his name is Ron Paul, but we all know he is a crazy old coot that wants to end the fed and is un-electable...or so they say, let's see what they say in the spring..

RodSBT
11-30-2011, 09:24 AM
The fact is, though, they did insure these loans. How do they manage to get off without paying out, at taxpayer expense? Is there anybody out there looking after the interests of taxpayers?

regards,
Waddie

Not arguing with you, just sayin' how it is. Go look at the first 15 pages of the TARP bill and you'll see how we all got screwed when the congress and bushco signed it into law. Most think TARP was about bailing out a few banks during the initial stages of the economic collapse. In reality it was signed in as tool giving the sec. of treasury sole authority to give away "money" to any financial institution he/she deems necessary with out approval of congress. And that is ANY "financial institution" around the world hence the $7.7 trillion passed around since 2008.

No, there isn't anyone except for Ron Paul and a couple others in gov. that actually look out for taxpayers interest let alone the law of the land.

RodSBT
11-30-2011, 09:27 AM
Let's also not forget that derivatives are traded privately behind closed doors with no real over site from independent entities like the SEC.

Tylerdurden
11-30-2011, 09:40 AM
Here Is What Happened After The Last Global Coordinated Central Bank Intervention



Presented with little comment but following the mid-September Global Save (http://www.zerohedge.com/news/global-liquidity-bailout-arrives-ecb-announces-emergency-liquidity-providing-operations-conjunc), things didn't end so well.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2011/12/20111130_ESsave_0.png (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2011/12/20111130_ESsave.png)
Chart: Bloomberg

http://www.zerohedge.com/news/here-what-happened-after-last-global-coordinated-central-bank-intervention

John of Phoenix
11-30-2011, 09:44 AM
...will the insanity ever end. Not until they throw a net over the unregulated derivatives markets and hedge funds.

Over the years, I've seen Wall Street come up with one screwball investment idea after another. Every one that has been leveraged has been at best, been a dud; at worst, a catastrophe. The greater the leverage, the greater the damage. Wiki says Long-Term Capital Management was leveraged 250:1. That's astronomical! I read a CBOE report that put at 1300:1. ONE THOUSAND THREE HUNDRED TO ONE! That SHOULD have been the wakeup call to regulate the "smart money" but it was left to the all seeing free market to self regulate the risk and we know how that worked.

The latest one, the infamous Credit Default Swap, that was suppose to mitigate the risk of sub-prime mortgages, is beyond belief. Bankers STILL don't know what's on their books - what that crap is worth, the risk they're exposed to or even how much leverage each CDS entails.

This is their chance to clean up their books and clean up their act (very doubtful on #2). It usually takes a few years to straighten things out, then 15 to 20 years later the bankers will screw things up again. (See also: S&L Crisis 1987; Financial Crisis 2007.)

Gerarddm
11-30-2011, 09:45 AM
US funded? Only partially.

But the Dow is up 400 points at ths writing. Discouraging. Plunge protection team at work?

RodSBT
11-30-2011, 10:06 AM
Not until they throw a net over the unregulated derivatives markets and hedge funds. )

There isn't a net big enough when you consider the derivatives value(or negative value) is in the hundreds of trillions of $'s.

RodSBT
11-30-2011, 10:08 AM
US funded? Only partially.

But the Dow is up 400 points at ths writing. Discouraging. Plunge protection team at work?

Absolutely, the president's working group on financial markets doing their handy work. Thank you Ronald Reagan.

RonW
11-30-2011, 10:17 AM
There isn't a net big enough when you consider the derivatives value(or negative value) is in the hundreds of trillions of $'s.

Absolutely, a few weeks ago I had a thread on where someone from the federal reserve said they should back bank of
america on it's $76 trillion derivative market when it goes bad. And J.P.Morgan was thought to have at least $79 trillion in derivatives....The best thing to do on the derivative market is to ignore it, and if it bankrupts a bank, so be it, let them argue it out in bankruptcy court, no concern of the american taxpayer.

These credit default swaps are called swaps because after the banks collected and pocketed the payments
for a few years, they knew they where going to go belly up once the economy crashed, so they bundled them, stamped
AAA on them and sold to them unknowing investors.

I heard that fannie and freddie went up to a leverage ratio of at least 80 to 1 and that good old goldman went up to
around or above 350 to 1 ..john's post above of up to 1300 to 1 is insane and shows that the bankers
knew damm well they where to going to explode literally the economy......Hang em ..

RonW
11-30-2011, 10:19 AM
the president's working group on financial markets doing their handy work. Thank you Ronald Reagan.

Are you saying that reagan created the market intervention by the feds..? Oh I believe you..