Archives of “liquidity crisis” tag

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Ben Bernanke bails out Time Magazine

  
Analysis, Economy, Education, LINKS, US Market
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timemagazinegreenspan

WASHINGTON – After naming Ben Bernanke Person of the Year for saving us from the crisis that he helped create, Time magazine sales have “dropped off a cliff,” according to one Time magazine employee, speaking on condition of anonymity.

As a result of the drop-off in demand, Time magazine is now going through a liquidity crisis. Because of this situation, Ben Bernanke has decided to provide Time magazine with the necessary liquidity to stave off bankruptcy. The Fed has added millions of editions of Time to its balance sheet.

“From what we can tell, these Time magazines – especially the edition with Greenspan on the cover – have more intrinsic value than do Treasuries. There is actually stuff to read in them. So our balance sheet isn’t impaired in any way by paying cover-price for these issues,” said Fed Chairman Bernanke. “We also felt it would be best for the economy to take these editions out of circulation, and we are asking the American people to sell their Greenspan editions to the FOMC.”

The preliminary numbers are showing that the Fed, through Open Market Operations, has monetized at least 500,000 copies of the edition with Greenspan on the cover – the last time a Fed Chairman appeared on the cover of the prestigious magazine.

“If necessary, the Fed has the tools it needs to remove any excess liquidity from the markets,” said Bernanke. “We could start by selling off the Jim Bunning baseball cards that we have on our balance sheet.”

Greece Prepares To Sue Wall Street

  
Economy, Education
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The only benefit of hitting rock bottom is you can’t really fall further. Which is precisely what has happened with Greece. The little country that started off the chain reaction that has already led to a currency and liquidity crisis, and made the solvency crisis in Europe all too tangible, by belonging to a monetary union it had no place in (a union which no reason to exist in the first place), is once again reminding the world of its existence, this time by G-Pap opening his mouth and inserted two whole legs in it. In an interview with CNN’s Fareed Zakaria to be aired today, G-Pap has threatened he may sue US banks for “contributing” to his country’s debt crisis. For those of you lacking in analogy skills, Greece is in the same shoes as a bankrupt debtor who wants to sue his creditors for daring to hike up his interest rate when the only means he has to roll his debt is by using another credit card (this one issued by US and European Taxpayers), even as bankruptcy is literally hours away. The Greek summation: that of a petulant 5 year old who has just broken dad’s favorite gadget: “We have made our mistakes,” Papandreou said. “We are living up to this responsibility. But at the same time, give us a chance. We’ll show you.” Now that would be amusing – after Greece destroyed its economy the first go round, we can’t wait to see what the country does for an encore. The only reason Greece is not bankrupt now is because even as its past mistakes have caught up with it and climaxed in a solvency and liquidity crisis unseen since the Lehman days, the country’s end would bring down all of Europe. If Greece would not have impaired French, German and UK banks, the country would have long been allowed to default. Yet diversion is always a good tactic: let’s bring the “speculators” into this yet again. After all it is unheard of in these turbulent Keynesian times for anyone, especially our own Fed Chairman, to own up to their endless mistakes. It is always, without exception, someone else’s fault.

More from Bloomberg:

 
 

Papandreou said the decision on whether to go after U.S. banks will be made after a Greek parliamentary investigation into the cause of the crisis.In the CNN interview, Papandreou said many in the international community have engaged in “Greek bashing” and find it easy “to scapegoat Greece.” He said Greeks “are a hard-working people. We are a proud people.”

“Greece will look into the past and see how things went,” Papandreou said. “There are similar investigations going on in other countries and in the United States. This is where I think, yes, the financial sector, I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here.” (more…)

IMF Seeking Boost In Lending Cap By $250 Billion To $1 Trillion

  
  Education
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In the latest sign yet that things in the world are roughly 25% worse than expected (give or take), the FT reports that the IMF will seek an imminent rise in its lending cap from $750 billion to $1 trillion to build safety nets that could prevent financial crises. “Even when not in a time of crisis, a big fund, likely to intervene massively, is something that can help prevent crises,” Dominique Strauss-Kahn, the IMF managing director told the Financial Times. “Just because the financing role decreases, doesn’t mean we don’t need to have huge firepower … a $1,000bn fund is a correct forecast.” At this point it is glaringly obvious that without the explicit support of the various central banks and of such fake international but really US organizations as the IMF, the already prevalent liquidity crisis would simply destroy the world. The troubling theme is that instead of taking away incremental worries, we have now gotten to the point where one bailout, like a butterfly in China, merely requires 10 more down the road. Alas, instead of a virtuous Keynesian dynamic, this is anything but.

Some more on the IMF’s feeble attempt at justifying the need for its exploding funding requirements, as well as its own attempt to validate that all is well:

 
 

South Korea, as this year’s president of the Group of 20 leading economies, is helping craft the plan. Seoul hopes to convince the G20 countries to back the increased IMF funding at a summit in South Korea in November. The G20 meeting in London in 2009 tripled IMF resources from $250bn. A US official said Washington was sympathetic to improved safety nets but needed more details on the Korean-IMF plan.

South Korean economists forged the plan because of their own bitter experience of their currency and stock market plunging in 2008. In spite of robust economic fundamentals, Seoul needed to be rescued from a dangerous liquidity shortfall by swaps from the US, Japan and China. (more…)

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