Stock markets and dollar plunge again on fears over bank crisis(facing a financial black hole)

Stockhouse ^ | 03/14/08

[Toddsterpatriot]

Well there was that LTCM thingie that would have taken down the banking system of the civilized world if the federal reserve had not made some ledger entries to provide some liquidity to an otherwise sound and solid company that faced a problem that there was a crisis in the credit markets such that it had cash flow problem, although they were not bankrupt.

How did they provide liquidity to LTCM?

I never said they did. LOL!

LOL!

How did they provide liquidity to an otherwise sound and solid company?

[Toddsterpatriot]

You are too dense even to understand dripping sarcasm when you read it.

So when you said they provided liquidity you really meant that they didn't provide liquidity?

[AndyJackson]

to whom? LOL!

[Toddsterpatriot]

provide some liquidity to an otherwise sound and solid company

What company?

[AndyJackson]

Do you think LTCM was a sound and solid company.

[Toddsterpatriot]

You said it, not me. Maybe you can explain what you meant here?

Well there was that LTCM thingie that would have taken down the banking system of the civilized world if the federal reserve had not made some ledger entries to provide some liquidity to an otherwise sound and solid company that faced a problem that there was a crisis in the credit markets such that it had cash flow problem, although they were not bankrupt.

Take your time. Get it right.

[AndyJackson]

Like I said, you cannot understand dripping sarcasm when it hits you between the eyes like a 2x4. LOL!

[Toddsterpatriot]

Well there was that LTCM thingie that would have taken down the banking system of the civilized world

Was a sarcasm tag missing here? Would LTCM really have taken down the banking system?

if the federal reserve had not made some ledger entries to provide some liquidity

Maybe you meant to put a sarcasm tag here?

to an otherwise sound and solid company

Sarcasm tag here?

that faced a problem that there was a crisis in the credit markets

Maybe here?

such that it had cash flow problem, although they were not bankrupt

How about here?

Add those tags so that we can see the humor. So that we don't think you were posting something stupid.

[JasonC]

All the Fed did in the case of LTCM was get all its lenders together in one room and get them to agree to put up money themselves to keep it afloat. 14 lenders put up something like $300 million each, the total actually coming to a little under $4 billion. With that backstop and its own remaining equity, LTCM rode out the short run widening in spreads it had been betting would remain stable. It gradually liquidated its various bond positions over about 2 years after that, with no distressed fire sale. Doing so enabled it to pay off all its lenders in full, and the fund was wound up without loss to any lender - though of course its original investors didn't fare so well.

It was simply a creditors agreement, and the Fed's role was deal broker only.

[AndyJackson]

all of it is just a parroting of the kind of idiocy put around by folks like you.

[AndyJackson]

Fed's role was deal broker only

I know. Deal broker. Ledger entry. paper shuffle. Nothing to see. Just move along. It's all good. LOL!

[JasonC]

No, ignorant lying spinner, brokering a free deal among the lenders is not a ledger entry anything or a paper shuffle anything. The lenders to LTCM took on additional risk rather than forcing it to liquidate all its bond positions at the worst possible time, because it was in their own interests to do so. It worked fine and enabled them to avoid any loss to themselves. Why any sane human being would object to any of it, is the mystery. Do you think men are morally obligated to shoot themselves in the head? Why, just to justify your own piggish view of them, or confirm your luddite hatred of financiers?

[Toddsterpatriot]

You're the only one spreading idiocy here. And you were busted on such an obvious error. Kinda funny.

[Toddsterpatriot]

The Fed didn't provide any money or ledger entries for LTCM

Not true LOL!

Wow, that's some sarcasm. Why didn't I see it before?

[AndyJackson]

I know. The Fed took an absolutely neutral position and just brokered the deal in 1998. The new partners liquidated the fund in 2000 at a slight profit with no help from the Fed whatsoever. Well, nothing like whiff of data to get the blood flowing early in the morning.

One does not suppose that the rapid injection of ready money and credit into the economy might have helped the position a little bit. Naa. Never.

[AndyJackson]

Do you think men are morally obligated to shoot themselves in the head? Why, just to justify your own piggish view of them, or confirm your luddite hatred of financiers?.

No. Just when they aim a gun at their head and shoot themselves don't expect me to stand in the way of the bullet or pay the hospital bill. And when, out of charity I am required to pay for it anyway, then they might say thanks and not go off in a haughty huff of moral superiority.

[AndyJackson]

brokering a free deal among the lenders is not a ledger entry anything or a paper shuffle anything

I know. And shuffling paper to keep BS solvent is not a ledger entry or paper shuffle either or anything else. It is just sound business men doing their best for the economy.

[JasonC]

As the graphs actually show, an increasing money supply is utterly normal both before and after, with no abrupt change around the time. Which was, moreover, not about LTCM, but about the Asia crisis - from net importers of capital, most of the Asian tigers went through currency crises to net creditor positions.

Nominal GDP and money supply measures both show 6-7% exponential growth over the long term. And track each other quite closely. Next you will complain that economic growth shouldn't exist and is all a nefarious plot...

[Toddsterpatriot]

One does not suppose that the rapid injection of ready money and credit into the economy might have helped the position a little bit.

So they didn't give money or liquidity to LTCM but added money to the banking system? Or are you being sarcastic again?

[JasonC]

You aren't required to pay anything. You are simply making it up.

If you don't want to use dollars, don't use dollars. Simple.