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Whoohoo liquidity injections are working!

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
I have to admit, in contrast to my sig, at least for now the bailout is having some positive impact, although it's far too early of course to break out the champagne. That said, if this is a "standard" recession, that'll be a lot better than a sky is falling depression. Maybe we can end up with 7-9% unemployment peak instead of something much worse.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
Originally posted by: PC Surgeon
ROFL!
As mentioned in another thread, the point of the bailout was to free up credit and lending to keep businesses able to operate. it seems to be acting in that direction, or at least SOMETHING is.

 

halik

Lifer
Oct 10, 2000
25,696
1
0
Originally posted by: bamacre
Didn't the OP create this thread about a week ago? ;)
Yeah when overnight came down from the 7%,
now the overnight is back around the historical average.
 

IronWing

No Lifer
Jul 20, 2001
62,626
15,973
136
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,711
6
76
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
OH BUT IT IS!!! LOOK AT LIBOR!!!! LOOK!!! FIX!!!! :roll:
 

Xavier434

Lifer
Oct 14, 2002
10,377
1
0
Originally posted by: PC Surgeon
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
OH BUT IT IS!!! LOOK AT LIBOR!!!! LOOK!!! FIX!!!! :roll:
What will you be saying in the future 5 years from now if we look back as see that the bailout really did end up working at least mostly as intended? I don't think you would admit that it worked even if the evidence is thrown right in your face and everyone around you thought you were crazy for thinking otherwise.
 

halik

Lifer
Oct 10, 2000
25,696
1
0
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
The way i understand it, Libor is the rate for OTC transaction, so if you're a bank in BBA, you can call up other banks and borrow at that rate. Whether banks do or don't isn't really relevant, so long the system works.

Was that the story where they had a whiteboard with a bunch of bank names on it that are looking for money and like 2 banks that were actually offering money? I heard that last weekend, it was from early Oct.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,711
6
76
Originally posted by: Xavier434
Originally posted by: PC Surgeon
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
OH BUT IT IS!!! LOOK AT LIBOR!!!! LOOK!!! FIX!!!! :roll:
What will you be saying in the future 5 years from now if we look back as see that the bailout really did end up working at least mostly as intended?
LMAO! Please define.
 

halik

Lifer
Oct 10, 2000
25,696
1
0
Originally posted by: PC Surgeon
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
OH BUT IT IS!!! LOOK AT LIBOR!!!! LOOK!!! FIX!!!! :roll:
So you really have no idea what you're talking about, right?
 

jman19

Lifer
Nov 3, 2000
11,183
610
126
Even though this might not have an immediate impact on lending, the dislocation between Libor and Fed Funds was causing all sorts of other problems in matching funding to interest revenue streams, so this is still good news.
 

Xavier434

Lifer
Oct 14, 2002
10,377
1
0
Originally posted by: PC Surgeon
Originally posted by: Xavier434
Originally posted by: PC Surgeon
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
OH BUT IT IS!!! LOOK AT LIBOR!!!! LOOK!!! FIX!!!! :roll:
What will you be saying in the future 5 years from now if we look back as see that the bailout really did end up working at least mostly as intended?
LMAO! Please define.
Freeing up credit and lending.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,711
6
76
Originally posted by: Xavier434
Originally posted by: PC Surgeon
Originally posted by: Xavier434
Originally posted by: PC Surgeon
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
OH BUT IT IS!!! LOOK AT LIBOR!!!! LOOK!!! FIX!!!! :roll:
What will you be saying in the future 5 years from now if we look back as see that the bailout really did end up working at least mostly as intended?
LMAO! Please define.
Freeing up credit and lending.
Quoted for the future.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
If price is not the issue and banks aren't lending because they see a huge recession, well that sucks, but I don't believe the bailout was intended to do anything besides freeing up lending. I am not sure what else the gov hoped, but its best case was just to avoid complete lockup of banks by helping lending rates. Now, if they are self-locking, well unfortunately its effect wasn't as substantial as hoped, but better than nothing.
 

NoStateofMind

Diamond Member
Oct 14, 2005
9,711
6
76
Originally posted by: Skoorb
If price is not the issue and banks aren't lending because they see a huge recession, well that sucks, but I don't believe the bailout was intended to do anything besides freeing up lending. I am not sure what else the gov hoped, but its best case was just to avoid complete lockup of banks by helping lending rates. Now, if they are self-locking, well unfortunately its effect wasn't as substantial as hoped, but better than nothing.
Wait! I am the government and I have a solution! I say we pass a measure to force lending! If you are a bank and do not lend, you will lose your window to the FED!! See, I saved us! Government meddling FTW! :roll:
 

halik

Lifer
Oct 10, 2000
25,696
1
0
Originally posted by: Skoorb
If price is not the issue and banks aren't lending because they see a huge recession, well that sucks, but I don't believe the bailout was intended to do anything besides freeing up lending. I am not sure what else the gov hoped, but its best case was just to avoid complete lockup of banks by helping lending rates. Now, if they are self-locking, well unfortunately its effect wasn't as substantial as hoped, but better than nothing.
Banks not needing to borrow is not a problem... the issue is banks not being able to borrow overnight because the rate is 7%

Right now if you're a BBA bank, you can get money overnight for little over 1%, which is how it's supposed to work. The bailout and liquidity injections fixed EXACTLY what they were intended to fix... this wasn't a "prevent the recession" fix, it was "make sure credit system works" fix.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
Originally posted by: PC Surgeon
Originally posted by: Skoorb
If price is not the issue and banks aren't lending because they see a huge recession, well that sucks, but I don't believe the bailout was intended to do anything besides freeing up lending. I am not sure what else the gov hoped, but its best case was just to avoid complete lockup of banks by helping lending rates. Now, if they are self-locking, well unfortunately its effect wasn't as substantial as hoped, but better than nothing.
Wait! I am the government and I have a solution! I say we pass a measure to force lending! If you are a bank and do not lend, you will lose your window to the FED!! See, I saved us! Government meddling FTW! :roll:
It's not a joke if it's close to reality. That sounds reasonable :0

 

Xavier434

Lifer
Oct 14, 2002
10,377
1
0
Originally posted by: PC Surgeon
Originally posted by: Skoorb
If price is not the issue and banks aren't lending because they see a huge recession, well that sucks, but I don't believe the bailout was intended to do anything besides freeing up lending. I am not sure what else the gov hoped, but its best case was just to avoid complete lockup of banks by helping lending rates. Now, if they are self-locking, well unfortunately its effect wasn't as substantial as hoped, but better than nothing.
Wait! I am the government and I have a solution! I say we pass a measure to force lending! If you are a bank and do not lend, you will lose your window to the FED!! See, I saved us! Government meddling FTW! :roll:
You know...when you grow old and gray you are going to look back at your life and all the bitching you did only to realize that it was all a complete waste of time simply because what you want overall from our Fed is not what the vast majority of people want...or is it that you are highly against representation?
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: halik
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
The way i understand it, Libor is the rate for OTC transaction, so if you're a bank in BBA, you can call up other banks and borrow at that rate. Whether banks do or don't isn't really relevant, so long the system works.

Was that the story where they had a whiteboard with a bunch of bank names on it that are looking for money and like 2 banks that were actually offering money? I heard that last weekend, it was from early Oct.
Also keep in mind that most floating rate contracts are indexed to LIBOR. Thus, securitization transactions, mortgages, and many other items, are greatly affected. That there was such a huge TED spread is indicative of a poorly functioning market.

I do think that the rescue plans should have included reps&warrants that they would lend, although it'd be tricky to paper up so we avoid a repeat.
 

chess9

Elite member
Apr 15, 2000
7,748
0
0
Originally posted by: halik
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
The way i understand it, Libor is the rate for OTC transaction, so if you're a bank in BBA, you can call up other banks and borrow at that rate. Whether banks do or don't isn't really relevant, so long the system works.

Was that the story where they had a whiteboard with a bunch of bank names on it that are looking for money and like 2 banks that were actually offering money? I heard that last weekend, it was from early Oct.
Uh, how do you know the system is working if banks aren't borrowing from each other?

Furthermore, with the market in the tank, and consumers getting ready to take another hit in rising gas prices after OPEC's announcement, and the loss of jobs, and the continued fall in housing production and sales, and the psychology of the market downright BLACK how much difference does LIBOR really make? Not much, in my estimation.

Until we start seeing signs of an expansion OUT of this recession, LIBOR has only tangential meaning, IMHO.

EDIT: BTW, LIBOR is only the average of 16 banks. And they are large banks. This number is helpful in some markets but is statistically skewed and unhelpful when many businesses are contracting.
-Robert
 

halik

Lifer
Oct 10, 2000
25,696
1
0
Originally posted by: LegendKiller
Originally posted by: halik
Originally posted by: ironwing
Yesterday NPR had a story pointing out that while the LIBOR was falling, the banks still weren't lending to each other. Price isn't the issue.
The way i understand it, Libor is the rate for OTC transaction, so if you're a bank in BBA, you can call up other banks and borrow at that rate. Whether banks do or don't isn't really relevant, so long the system works.

Was that the story where they had a whiteboard with a bunch of bank names on it that are looking for money and like 2 banks that were actually offering money? I heard that last weekend, it was from early Oct.
Also keep in mind that most floating rate contracts are indexed to LIBOR. Thus, securitization transactions, mortgages, and many other items, are greatly affected. That there was such a huge TED spread is indicative of a poorly functioning market.

I do think that the rescue plans should have included reps&warrants that they would lend, although it'd be tricky to paper up so we avoid a repeat.
Heh I've got ~38K worth of Grad loans indexed to libor (L+150) and my parents' ARM is indexed to it also.
 

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