PPVRA From Brazil, joined Nov 2004, 8492 posts, RR: 43 Posted (4 years 3 months 2 weeks 17 hours ago) and read 1124 times:
Quote: Fed offers unlimited support
Fed to offer dollars to Bank of England, European Central Bank and Swiss National Bank to lend to private banks.
By David Goldman, CNNMoney.com staff writer
Last Updated: October 13, 2008: 9:09 AM ET
NEW YORK (CNNMoney.com) -- The Federal Reserve announced Monday it will offer an unlimited amount of dollars to three other central banks in an unprecedented move to provide liquidity to the global banking system.
The U.S. central bank will lend dollars at a fixed interest rate to the central banks of England, Switzerland and the European Union, according to a joint statement from the banks.
The other central banks will be able to borrow "any amount they wish" in exchange for collateral. The goal is to flood the financial system with much-needed dollars.
Klaus From Germany, joined Jul 2001, 20851 posts, RR: 55 Reply 1, posted (4 years 3 months 2 weeks 16 hours ago) and read 1100 times:
Whether that's an attractive offer remains to be seen.
In any case it looks like a Dollar inflation signal, since these Dollars probably won't be (can't be) drawn from the existing supply.
And since the collateral would basically have to be shifted into the Dollar space, it would amount to an emergency aid measure for the Fed at the expense of the other central banks, but also at the expense of the Dollar's value as soon as the lending agreements would end.
The question is if it's a wise move to just keep shoving money down the banks' throats until some of it will (maybe) come out of the other end...
The losses will have to be carried by somebody eventually. Socializing them through inflation would not necessarily be my favourite approach.
PPVRA From Brazil, joined Nov 2004, 8492 posts, RR: 43 Reply 2, posted (4 years 3 months 1 week 4 days 1 hour ago) and read 991 times:
Quoting Klaus (Reply 1): The losses will have to be carried by somebody eventually. Socializing them through inflation would not necessarily be my favourite approach.
Yeah, same here. High inflation would create even more problems, especially for anyone living with a fixed income like retired folks.
Quoting Klaus (Reply 1): The question is if it's a wise move to just keep shoving money down the banks' throats until some of it will (maybe) come out of the other end...
Considering the amount of money already poured into them, and little to nothing coming out, maybe the diagnosis is creditworthiness and not simply just a "credit dry up". Until we are done cleaning up our balance sheets of so much bad debt I don't think this will be over, come stimulus or not.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
Klaus From Germany, joined Jul 2001, 20851 posts, RR: 55 Reply 3, posted (4 years 3 months 1 week 4 days ago) and read 983 times:
The question is if the actual status of all the outstanding investments and "investments" is really already settled at this point... I wouldn't be surprised if it took a few quarters to really get a realistic picture of the situation after a few reporting cycles.