Thread: A note of caution for those with deposits in US Banks

Originally Posted by bkkandrew

Why do you do that?

giving up already, troll ? can't let that happen

You are a fraud, and you know it

should we go back to your silly claims and lies ?

^ you are back !!! what shame ? the same one as the one you claim to be a MD or FD for a fictional company ?

or the one where you claim that price elasticity will raise oil price forever ?

^I haven't gone anywhere.

You have a fixation with me being an MD, don't you. FWIW, I have been an MD or FD of 12 companies and am currently semi-retired at 35. How are you doing?

Originally Posted by bkkandrew

FWIW, I have been an MD or FD of 12 companies and am currently semi-retired at 35. How are you doing?

and you are living in a 5k condo ? lol !!!

^I have a 5K condo (brand new) in Ratchada, slightly bigger that the one I was paying 14K for next door. I still have a 4.5K one near On Nut and a large house in Somerset, UK. I did, however, sell 4 properties in the UK last lear (at the height of the house price boom).

Again, how are you doing?

^ so let me get this straight, you are a multi millionaire in BP, and yet you live in a 5k condo, bitch when the motocycle taxi overcharge you by 2 THB, and then make a fool of yourself on a forum by making silly predictions while claiming to be a financial expert and yet fail to understand basic economic principles ?

yes indeed you are priceless, bkka

So when did anyone become rich by wasting money?

Again, how are you doing?

^ not sure why my post was deleted, so I will post it again for bkka

I am doing fine, thank you. Having a beer now

^Leo from the 7/11?

BTW, your post was no doubt deleted, as you simply troll this forum looking for your next bullying victim.

This MoFo doesn't get bullied and that is why you are crying in your beer.

Anyway, back on topic:

Fed Loans May Give Lehman Breathing Room Bear Lacked (Update2)

By Scott Lanman and Steve Matthews




Sept. 10 (Bloomberg) -- Access to Federal Reserve loans means Lehman Brothers Holdings Inc., which has plunged this week on concern about its capital, may have breathing room that Bear Stearns Cos. lacked before its abrupt collapse.

The program instituted in the aftermath of the Bear Stearns debacle, the Primary Dealer Credit Facility, could be used for funding while officials, regulators and executives find alternative sources of cash, Fed watchers said.
``The PDCF could be used to keep Lehman operating until a broader solution was found,'' said Brian Sack, a former Fed research manager who's now senior economist at Macroeconomic Advisers LLC in Washington. ``The challenge is figuring out what the broader solution is.''

Lehman can borrow overnight from the central bank, with escalating costs if it keeps using the program. Because it's a stopgap, speculation may mount that the government will again intervene to prevent a large financial company from failing, after the Bear Stearns rescue and takeovers of Fannie Mae and Freddie Mac.

``Given what was done with Freddie and Fannie and Bear Stearns, it's hard to distinguish why Lehman is not too big to fail as well,'' said Robert Eisenbeis, chief monetary economist at Cumberland Advisors, and a former research director at the Atlanta Fed. ``My guess is that everyone will blink again and Lehman too will be saved. We are in for a rough ride.''

More here:

Bloomberg.com: Worldwide

So, we can assume Lehman has been deemed to big to fail too. Those tax dollars are being burnt fast. No, wait, ahem, that dosh borrowed from the Chinese is, er, being fried?

More details on the Lehman loss:

Lehman Plans Neuberger Auction, Real Estate Spinoff (Update3)

By Yalman Onaran



Sept. 10 (Bloomberg) -- Lehman Brothers Holdings Inc., reporting the biggest loss in its 158-year history

From:

http://www.bloomberg.com/apps/news?p...fDk&refer=home

Despite the suggested safety net of the FED, I, for one, would not risk placing funds with Lehman any time soon...

Originally Posted by bkkandrew

This MoFo doesn't get bullied and that is why you are crying in your beer.

how many fights have you been into in the last 48 hours with how many members ? quite a few I suspect

^Nope, just you and the senile fool.

Anyway, back on topic:

More `Chaos' Ahead for U.S. Banks, Investor Jim Rogers Predicts

By Lynn Thomasson and Betty Liu

Sept. 10 (Bloomberg) -- U.S. financials face more ``chaos'' as the credit market worsens, investor Jim Rogers predicted.

``Balance sheets of many of these financial institutions are still terribly impaired and there are more problems to come,'' he said during a Bloomberg Television interview. ``We had the worst credit bubble in the history of the world. You don't clean that out in a year or two or three.''

The chairman of Singapore-based Rogers Holdings said he's still betting against U.S. investment banks, even after ending his short sale of Citigroup Inc. a few weeks ago because the bank's stock fell too low. Citigroup shares closed at $14.56 on July 15, the lowest since 1997. The world's largest bank by assets has rallied 25 percent since then.

Rogers also called the government takeover of Fannie Mae and Freddie Mac ``outrageous'' and said the largest U.S. mortgage finance companies should have declared bankruptcy.

``I'm happy some people will be able to get lower mortgages, but I shouldn't have to pay for it,'' he said. Fannie Mae and Freddie Mac executives aren't ``turning in their Maseratis when they're asking us to bail them out.''

Complete article here:

Bloomberg.com: Worldwide

The news about how sour the Freddie/Fannie deal actually is will start to seep out over the coming days...

US BECOMES WORLD'S BIGGEST COUNCIL ESTATE AMERICA became the world's largest council estate last night after the US government bought all the houses.

Fudd has underpinned US mortgages for 40 years

With the nationalisation of the country's biggest mortage companies, Washington can now begin painting all the front doors the same colour and filling the gardens with rubbish.

Treasury Secretary Hank Paulson said: "By taking Kenny G and Elmer Fudd into state control the US government is now the second biggest owner of third rate homes after Liverpool City Council."

He added: "Since the Pilgrim Fathers set foot on Plymouth Rock, the American dream has been about working hard and owning your own home until the government suddenly turns into a bunch of communists and buys up all the mortgages.

"Rest assured we will choose a sickly blue-green colour for your front door and inject damp into the walls in time for Christmas."

Mr Paulson continued: "Now we all know that when the government owns your home you have an immediate and irresistible urge to use it as a one big toilet.

"All I would say is: do at least try to use the lavatory, but if not, then please sweep all your droppings into the corner of the room and then cover them in sawdust."

Meanwhile economist Tom Logan warned: "If all Americans are now effectively council tenants then it's only a matter of time before they become fat, ignorant bastards who sit around all day eating huge bags of crisps and watching X-Factor."

US BECOMES WORLD'S BIGGEST COUNCIL ESTATE - The Daily Mash

Originally Posted by bkkandrew

Meanwhile, the collective sum of all US banks are now technically bust/bankrupt/insolvent/skint/brassic/broke/penniless/short of a bob or two (select your favorite...

See:

FRB: H.3 Release--Nonborrowed Reserves

They now actually have a NEGATIVE sum of money in reserve. Scary...

....has no adverse implications for the availability of reserves to the banking system.

Originally Posted by Butterfly

Most central banks have a built-in rescue system, it's called the window discount rate, basically a "special discount" rate for banks to "borrow" reserves from central banks,

That UK bank with the bank run a few months ago did exactly that,

Yes it's a disaster, and the news are quiet about it for good reasons, the last thing you need is a bank run as this would collapse the whole system, like it did in the 1920s

The 'discount window' has nothing to due with "rescue" it is used in the day to day operation of the US banking system. There is nothing "special" about the rate it charges. The term 'discount' comes from that fact that the borrowing bank puts up a certain amount of assets as collateral for the loan and receives less than that amount as the loan. Thus the assets are "discounted"

This whole subject is quite technical and can easily be misunderstood by the gereral public.

Originally Posted by Butterfly

Originally Posted by who

The 'discount window' has nothing to due with "rescue" it is used in the day to day operation of the US banking system.

I think you are confusing the Fed Funds rate and the discount window,

Originally Posted by Wiki

This rate is generally set at a rate close to 100 points above the target federal funds rate. The idea is to encourage banks to seek alternative funding before using the "discount rate" option

The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.

It is distinct from the federal funds rate or its equivalents in other currencies, which determine the rate at which banks lend money to each other. In recent years, the discount rate has been approximately a percentage point above the federal funds rate (see Lombard credit). Because of this, it is a relatively unimportant factor in the control of the money supply and is only taken advantage of at large volume during emergencies.

Discount window - Wikipedia, the free encyclopedia

The discount window is an instrument of monetary policy that allows eligible institutions to borrow money from the central bank to meet temporary shortages of liquidity.
The interest rate charged on such loans by a central bank is called the discount rate.

The Federal Reserve Bank of New York held an emergency meeting Friday night with top Wall Street executives to discuss the future of venerable firm Lehman Brothers Holdings Inc. and the parlous state of U.S. financial markets.

The meeting, which began at 6 p.m., was called by the New York Fed in an attempt to find a solution to the problems plaguing Lehman. The group, which consisted of the heads of most major financial institutions, is expected to meet throughout the weekend to see if it can agree on some way to rescue the ailing firm, according to a person familiar with the matter.

Business - WSJ.com

Here we go again. I wonder which firm will be lent some money to prop up Lehman?

Capital fears for AIG and Washington Mutual


By James Quinn Wall Street Correspondent

Last Updated: 12:00am BST 13/09/2008





American International Group, the world's largest insurer, is under pressure to clarify its capital position, amid concern that its balance sheet is not strong enough, as other financials began to feel the pain meted out earlier in the week to Lehman Brothers.

Beleaguered American savings bank Washington Mutual (WaMu) is understood to have told potential buyers it is not interested in being taken over in spite of constant questions about its capital adequacy.

AIG, best known in the UK as the shirt-sponsor of Manchester United, is believed to be considering scheduling a conference call with Wall Street analysts on Monday morning to confirm its position and assuage worried investors.

The call, if it happens, will come after ratings agency Standard & Poor's said last night that it may cut the insurer's credit rating by up to three notches. AIG's shares ended yesterday down 30pc.

Continued here:

Capital fears for AIG and Washington Mutual - Telegraph

^The couterparties to any investment bank would be hurt badly by any outright insolvency. Bank A owes money to bank B, which has lent it to bank C. Bank C goes bust, leaving bank A and B in trouble. Its called contagen. One large failure could bring down the entire banking system. It was broadly known that if Bear had gone bust properly they would have taken JP Morgan Chase with them.

Originally Posted by bkkandrew

Here we go again. I wonder which firm will be lent some money to prop up Lehman?

i defer to your knowledge and experience, but i would think that goldman would be a likely choice....that is if they're books are as clean as they say they are.

what a country......profits for banks are privatized and their losses socialized.

Originally Posted by bkkandrew

It was broadly known that if Bear had gone bust properly they would have taken JP Morgan Chase with them.

bear is lucky they fell first. they're isn't going to be anyone around to save merril if/when they go under.

Originally Posted by Butterfly

Originally Posted by who

The interest rate charged on such loans by a central bank is called the discount rate.

Yes, it is and I stand by what I said below, that is a "special" rate (and discounted). The collateral assets you mentioned are not discounted as they are not sold, they just serve as collateral, usually pre-approved by the Fed. I think you are confusing US Treasury Zero Coupon bonds, a short term instrument often used as collateral in complex edging operations by market participants, including banks. The Fed is NOT the US Treasury.

Originally Posted by Butterfly

Most central banks have a built-in rescue system, it's called the window discount rate, basically a "special discount" rate for banks to "borrow" reserves from central banks,

until 2003 the rate used to be "especially" low (that is fixed by the Fed and usually below the Federal Fund rate) but what I didn't know is that the rates were restructured in 2003 and are now 100bp above the Federal Fund rate.

More here: FACTBOX-What is the Fed's discount window | Markets | Bonds News | Reuters

WASHINGTON, Aug 10 (Reuters) - The U.S. Federal Reserve said on Friday it was providing liquidity as needed to keep keep financial markets operating normally. It also said its discount window was available as a source of funding.

The primary discount rate, currently at 6.25 percent, is one of the U.S. central bank's monetary policy tools and provides a borrowing safety valve for qualifying institutional borrowers.

The primary discount rate is 1 percentage point above the target for federal funds rate, which is Fed's benchmark short-term interest rate.

Another source here: Real Time Economics : Explaining the Discount Window

The discount window is a channel for banks and thrifts to borrow directly from the Fed rather than in the markets. Until a few years ago, the discount rate was set below the fed funds rate and loans were subject to numerous conditions.

Banks were reluctant to access the window because it was associated with a stigma usually reserved for distressed banks. A few years ago the Fed overhauled the discount window to try and alleviate that stigma; the rate was then set one percentage point above the funds rate and subject to far fewer conditions. In spite of that, discount window borrowing has remained paltry.

Hardly used for day to day operations as you mentioned, at least until the rate were restructured in 2003, so maybe banks are less reluctant to borrow now. With the latest crisis, they surely did use it extensively. Not a good sign though and definitely not normal.

Regarding paragraph one above:

"special" in relation to what? "discounted" from what? I agree: the collateral is not sold, other wise it would no longer be collateral. Re: Zero Coupon Treasuries: I personally would not refer to 30 year bonds as 'short term'. I am not familiar with "edging" operations. I agree that the Fed is not the Treasury. The Treasury is a federal gov't Department, the Fed is a privately owned corporation.