NICE GAINS ... IN DOLLAR TERMS
[Latest Global Dollar Liquidity Measure: +13.4% annual growth rate; latest Endogenous Liquidity Index: -31.3%]
The U.S. market opens with strong gains ... in a currency that is increasingly acting as a third-world currency. (See Macro Man's take). Meanwhile, here's some stuff I've been reading: [1] PIMCO's Paul McCulley on the "real" and "shadow" banking system ("... there is a mighty gulf between the Fed's liquidity cup and the shadow banking system's parched liquidity lips"); [2] Lombard Street Research's Diana Choyleva on the hype surrounding Sovereign Wealth Funds; [3] Philly Fed's Charles Plosser on the distinction between short-liquidity injections and changes in the Fed funds rate.
1 comment:
From yesterday...by you:
"I beg to disagree. Nobody said that credit risk had disappeared, only that it was better diversified. Two steps forward, one step backwards: that's the way humanity makes progress. "
Rather -Three steps back. This di-worsification just allowed banks to load up on junk bonds from LBO's, sub-prime mortgage backed junk and SIVs and say they were diversified.
As we are finding out- they are basically behaving like the same creature.
It has added instability. When mortgages on a piece of plywood in the Inland Empire was owned by a small bank in California, things were under control.
Now that it has been sold to a German Industrial Bank (WTF?!) by Lehman or Goldman , and who has no idea what asset is backing it's piece of paper and cannot find a buyer for it.
Fish
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