Boomed! - Just bought a load of HBOS ...

[Cyberman]

You're confusing loans of last resort etc with the normal funding/lending processes of running a central bank.

There's a really good training course you can go on called "How the City Works" or something like that. Perhaps you would benefit from attending?

Not confusing at all. This facility was denied until after Northern Rock(check the facts!!!) hit the buffers. It is given as a general loan to banks on application in order to keep individual borrowers secret. It is effectively a Lender of Last Resort facility, but banks can obviously keep their reasons and borrowing levels secret under this mechanism.

[realityhack]

Ah, that's all right then, because Realityhack says everything is ok.

Not me - not based on anything I've read either. Just the educated opinion of the veteran bankers, analysts and traders I'm surrounded by and work with every day. They're all having a good laugh about the situation actually - some expressed frustration about some shorting cowboys and hope the regulator catches up with them.

[DaveB]

The Central Banks have been pumping additional funding into the markets for the past 18 MONTHS, except for the BofE that only did so a year ago after the Northern Rock debacle. I repeat, you are in denial.

All the major banks borrow money from the ECB or the BofE on a regular basis, it is nothing new and nothing to get alarmed about. The rise in demand now and the specific release of funds to meet that demand is driven by the rise in the LIBOR rate. Typically LIBOR rates are 1 or 2 points above the base rate. Right now they are running at 2-3% above base rate becasue the banks are hanging onto their cash rather than lending it out.

Since banks can borrow from the ECB at base rate - 4.4% currently - they are doing so. This lending requires a greater level of collatoral than inter bank loans and these requirements have actualy been tightened up recently. This is why they normally prefer to borrow from one another.

The ECB / BofE is not bailing anyone out specifically, they are supporting market liquidity in general.

If there is going to be another major failure it will be another US institution, not a UK or European bank, and my money is on it being AIG.

[snaw]

If there is going to be another major failure it will be another US institution, not a UK or European bank, and my money is on it being AIG.

Read somewhere that JP Morgan and Goldmans are in talks to advance them $75 billion in credit, so maybe not.

[Cyberman]

All the major banks borrow money from the ECB or the BofE on a regular basis, it is nothing new and nothing to get alarmed about. The rise in demand now and the specific release of funds to meet that demand is driven by the rise in the LIBOR rate. Typically LIBOR rates are 1 or 2 points above the base rate. Right now they are running at 2-3% above base rate becasue the banks are hanging onto their cash rather than lending it out.

Since banks can borrow from the ECB at base rate - 4.4% currently - they are doing so. This lending requires a greater level of collatoral than inter bank loans and these requirements have actualy been tightened up recently. This is why they normally prefer to borrow from one another.

The ECB / BofE is not bailing anyone out specifically, they are supporting market liquidity in general.


If there is going to be another major failure it will be another US institution, not a UK or European bank, and my money is on it being AIG.

The BofE has released funding on an unprecedented scale over the past year and only a fool would not admit the the BofE refused lending to Northern Rock last year. The funds lent are now far in excess of the 25 Billion or so lent to the Rock(which incidentally has already repaid 9 Billion), and on this scale this is Lender of the Last resort in all but name.

[Moscow Mule]

Boomed

30 points up....

[sasguru]

Right. Going to get out now. Not quite at 190 but good enough

[realityhack]

News: AIG are hitting the fan tomorrow.

Thought you might like to know.

[downsouth]

Read somewhere that JP Morgan and Goldmans are in talks to advance them $75 billion in credit, so maybe not.

Cant see this happening, remember business still goes on and yes they do have a vested interest to keep business as normal as possible. They also need to ensure they do good business and buying when high'ish aint good business if they can get for cheaper a few days later.

But remember with the Bear Sterns collapse, JPMC let the price go as low as possible before buying them out at the last minute to prevent even more disaster in the sector

AIG would be a biggy tho

[DaveB]

Cant see this happening, remember business still goes on and yes they do have a vested interest to keep business as normal as possible. They also need to ensure they do good business and buying when high'ish aint good business if they can get for cheaper a few days later.

But remember with the Bear Sterns collapse, JPMC let the price go as low as possible before buying them out at the last minute to prevent even more disaster in the sector

AIG would be a biggy tho

The US authorities also gave finacial guarentees about Bear Sterns to make it favorable for JPMC to buy them. Not going to happen for AIG. The line was drawn with Lehmans, the US government arn't going to be bailing anyone else out in a hurry.

To quote Alan Greenspan

Let's recognize that this is a once-in-a-half-century, probably once-in-a-century type of event.

There's no question that this is in the process of outstripping anything I've seen and it still is not resolved and it still has a way to go...

We will see other major financial firms fail but this does not need to be a problem. It depends on how it is handled and how the liquidations take place.

And indeed we shouldn't try to protect every single institution. The ordinary course of financial change has winners and losers.