Posted on 08/02/2008 7:20:16 AM PDT by BGHater
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.
"It shows there's a shortage of liquidity in the system," said Christopher Low, chief economist at FTN Financial in New York.
Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before. Although these numbers are still very small compared with primary credit, "What that tells you is that there's an increasing number of banks that the Fed is classifying as 'unsound' or inadequately capitalized," Low said.
Analysts may watch the trend of secondary credit closely, given the travails of U.S. regional and smaller banks and the likelihood that a continued decline in house prices and rise in foreclosures and bad loans will deepen the difficulties of the banking sector for many months or years.
Some analysts ascribed the overall rise in demand to use the Fed's short term discount window borrowing facilities to a mix of factors.
"I am sure there are troubled banks trying to tap the window," said Michael Feroli, U.S. economist with JPMorgan in New York. But he added: "more and more banks are trying to take advantage of the pure economic advantage of borrowing at a cheap rate and you are seeing a gradual fading away of the stigma of using the discount window."
(Excerpt) Read more at biz.yahoo.com ...
Are they buying it? Or taking it as collateral?
What do YOU mean by "too much money"?
I should ask you that. You seem to be claiming (correct me if I misunderstood) that they're printing too much.
Both. When the collateral is worth less than the loan collateral — that’s a buy-in.
Are you sure about that?
What do you mean?
I don’t know, but we both have front row seats.
Zimbabwe has had a nearly complete breakdown of its economy and financial systems. I imagine liquidity there isn't very good in spite of the extremely high inflation rate.
You mean a metal based currency doesn't prevent dilution?
Reading old magazines and advertising from decades ago banks would list their assets and liabilities, I guess to reassure depositors.
Yes their economy is in breakdown. And all the injected liquidity, the habit of it -- is what brought it down. The government of the nation once known and wealthy as Rhodesia, lost it all by taking on an addictive habit. (Along with other related bad habits -- they band together as a gang of thugs do such habits.)
As Kings debased coin, so did the kingdom externally lose trade, and internally sowed seeds of economic chaos because of mistrust. In a bad money system the bad rise, and the good get tripped up and stranded in their own good ethics.
Me, I never promoted credit cards with signature debt lines to those most unlikely to pay it back. I would consider that unethical. Although it did wonders for US liquidity, didn't it?
And when the loan is paid off, that's a buy-out?
So, back to my original questions....
So they've been diluting (printing) more than usual? How much more? Or is that just your feeling?
I always argue with logic, myself.
You don't have to print more federal notes to dilute the value of real assets and current wages due. You can just take bad paper and not mark it to market. That also allows the bad to be badder, and out-compete the ethical.
No, I'm asking you to prove your assertions.
Me, I am absent of feelings.
And so far, facts.
You don't have to print more federal notes to dilute the value of real assets and current wages due.
Running from your original claim, that the sovereign is stealing by dilution?
But, nonetheless we can still make ourselves a Zimbabwe even without a single Mugabe.
Where are your facts, man, don't be coy. You have them - put them out there! Don't let your sociopathy get in the way.
You imply you are ready with them, you demand mine -- what are yours?
No, Todd doesn't argue with logic. His arguments have no logic.
Show me.
You imply you are ready with them, you demand mine
You're making the claim, back it up.
It is criminal what the PTB are doing to the value of the dollar, and pretending that nothing is wrong. The selling of bundled debt for profit to make themselves rich, at the expense of the foundations of this once free country, make me sick.
So, what ever happened to penny candy? /s
It's like trading a Mickey Mantle Topps card for some forgotten one-season player.
Would you want a Toddsterpatriot running YOUR mutual fund?
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