Stuart Studebaker wrote:
Bud wrote:
It is not quite as bad as the US being bankrupt.
OK, You say so....
:-/
"The calculation is to subtract the borrowings from the Federal
Reserve from the reserves of the banks. The reserves are what is
on deposit at the Fed by the banks to meet their reserve requirement
(less vault cash which can be used to meet the requirement) ."
Right, which is why I find a Negative Number very disturbing. It's
like
"We need reserves to get money from the Fed, so we're just send in an
IOU instead of cash..." Nice. [irony] That Sounds Like A GREAT
Idea![/irony]
"Now that the Fed is making big loans to banks of $80 B under the
Term Auction Facility (TAF), the net of subtracting the TAF is that
the banks have borrowed more than the reserves required. "
We'll see how long that lasts.... Here's an interesting question: If
the Gov't lends $80B for a month, but the banks don't pay it back,
then
what?
"The amounts are not overwhelming at $80 Billion for the TAF, but it
does turn
the concepts of fractional reserve banking on it head, with the net
reserve less borrowings becoming negative."
Hmmmm. I didn't know the TAF counted as a reserve, much less a
NON-BORROWED reserve. This is making hash out of the h3 non-borrowed
reserve table. I thought the TAF was just a way for the gov't to buy
bad debt.
"Yes banks are bankrupt, but this is not the right measure. We need
to guess how much to decrease the value of their loans on their
books for potential default, or market price write down. JPM for
example had 91 Trillion (with a T) notional value of derivatives.
Appling 2% as possibly the amount that might be a risk, we get
$1.8 Trillion at risk. "
double gulp.
"The Market Cap is $160 B ($.16 Trillion). That is why they need
to borrow. Then add $30 B to take over the Bear Stearno toxic waste."
Lovely, that.
This then leads to an interesting question:
If the non-borrowed reserves are reflecting borrowing money from the
TAF , when can they possible get back in the black on the h3 table?
They have no reserves, and they're borrowing Billions, they need to
get
some profits rolling in order to get their Reserves back above zero.
But, if they're borrowing money to keep afloat, and they're sinking
because their source of income (debts and debtors) have gone sour and
can't / won't pay, then what exactly is the strategy to solvency?
The only thing I can think of is for the TAF to actually become a debt
liquidation instrument, and literally dump billions into the system by
buying all the bad debt and then "burning the certificates". God this
crap makes my head spin.
HW
*********************
Agreed. Such crap will make everyone's head spin as the inability of
any government to control humanity's infection by the madness of greed
sees us turn to our nuclear and other weapons of mass murder . . .
WAIT FOR IT!! . . . to bring our respective financial houses into
some semblance of order with "the ultimate benefit" of billions having
been butchered in order to bring "worthwhile" humanity's "Sustainable
footprint" in balance with the earth's marginal ability to provide for
our "needs" (As opposed to "wants").
Gads! And millions of fools still fail to say "Crap to all that! I'm
joining The Tax Refusal".
Speaking of which:
If you have a lawful duty to refuse to be party to the murder of one
or several individuals, it MUST follow that you have a similar duty to
refuse to sup****t a society that would commit mass murder for whatever
reason.
Thank you.
To a safer, saner and more caring world.
To Duty.
Daniel J. Lavigne, Founder
International Humanity House
http://www.taxrefusal.com
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