How should we read this mornings global liquidity injection? Japan added $24 billion. India's central bank kicked in some liquidity. The European Central Bank added $99 billion. The Swiss added $7 billion. The Federal Reserve accepted $50 billion in overnight repurchase agreements and said it stands ready to add more cash into the system. This is on top of the $70 billion the New York Fed added on Monday, the biggest cash injection since the aftermath of September 11th.
This suggests that the central bankers of the world have a coordinated plan to create a temporary liquidity surge. This suggests that depository banks themselves are hording funds following the collapse of Lehman Brothers and perhaps bracing themselves for the collapse of AIG.
"I'm reading this as an indication that AIG will be allowed to go. They're trying to make sure the markets don't freeze up in the wake of a catastrophe," one credit trader told us this morning.
Update: We added a poll on whether AIG will file for bankruptcy over in the little permanent poll space on the right.
Posted by guest , Sep 16, 2008 9:02AM
How is AIG in this much trouble...why don't they just mark the shit all the way down as low as possible - most conservative. Disclose it and move on. That way there is that much less in losses to disclose down the road.
And what the hell was an insurance giant doing investing in subprime CDOs??? Brilliant risk management there fellas.
Posted by guest , Sep 16, 2008 9:02AM
How is AIG in this much trouble...why don't they just mark the shit all the way down as low as possible - most conservative. Disclose it and move on. That way there is that much less in losses to disclose down the road.
And what the hell was an insurance giant doing investing in subprime CDOs??? Brilliant risk management there fellas.
Posted by guest , Sep 16, 2008 9:04AM
AIG will be allowed to go? they're insolvent and stealing money from the their policy holders. They're already gone.
Posted by guest , Sep 16, 2008 9:06AM
AIG's problem isn't as simple as marks on CDOs they hold in their investment portfolio.
They 'insured' CDOs held by banks through swaps, and with each ratings downgrade they are forced to post more collateral. It is out of their hands at this point.
Posted by guest , Sep 16, 2008 9:08AM
i knew it! this is the dawn of the New World Order. You guys never really believed the powers that be were elected in Nov did you? I have no doubt that by Dec 12 2012 the Knights Templar will come out of hiding to once again control the world.
Posted by guest , Sep 16, 2008 9:09AM
@5 Go get your dungeons and dragons fix. Only those above the age of 12 allowed to post on this blog...
Posted by guest , Sep 16, 2008 9:09AM
WWLKD?
What Would Larry Kudlow Do?
Posted by guest , Sep 16, 2008 9:10AM
This is going to take a hell of a lot of sham-wows to fix. I'm long Vince Offer.
Posted by guest , Sep 16, 2008 9:11AM
preparing != deciding
Posted by guest , Sep 16, 2008 9:13AM
@4...well then they are still shit for brains to be doing that...why wouldn't they have stopped that when the two Bear funds collapsed over a year ago!
Let'em fail...
Posted by guest , Sep 16, 2008 9:14AM
It's a scary proposition if the central banks have indeed decided that the complex financial engineering web is going to fail sooner or later, so they're going to try to let it fail while protecting the people on the street (commerical banks).
This may be inevitable and it may actually be the best of bad options (as opposed to being held hostage), but it means that everyone who isn't tied to a deposit base is going to lose their job.
Posted by guest , Sep 16, 2008 9:19AM
@10. They stopped in 2005. Long tail risk.
You say "let 'em fail". I hope you don't work for one of the banks that will have to raise substantial capital when their credit protection from AIG is worthless in the event of default.
Posted by guest , Sep 16, 2008 9:20AM
Switzerland coming up big with the seven large! Thanks, fags!
Posted by guest , Sep 16, 2008 9:32AM
Quick question:
If the fed added 70bn in overnight repo yesterday, why would you use the term "on top of" to describe the 50bn added today? Didn't yesterdays repos roll off this morning. Isn't this how "overnight repo" works? Or did they do a coupon/bill pass yesterday?
Posted by guest , Sep 16, 2008 9:44AM
Gross guranteed 760m of AIG debt
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awvyuzIyvVz4
lolool
Posted by asiankida , Sep 16, 2008 9:46AM
is it the subprime or the CDS's that are causing all the trouble at AIG?
Posted by guest , Sep 16, 2008 9:48AM
this on top of the liquidity the brits put into the market yesterday.
Posted by guest , Sep 16, 2008 9:48AM
@ 13 thanks for the laugh!!!
Posted by guest , Sep 16, 2008 9:51AM
Are you serious? anyone listening to Greenberg???
Posted by guest , Sep 16, 2008 10:07AM
@ 19 - yes... scary.
Posted by guest , Sep 16, 2008 10:19AM
@5 We already do. Fnord.
Posted by guest , Sep 16, 2008 10:41AM
@4 - why collateral, thought swaps were not collateralized?
Posted by guest , Sep 16, 2008 10:49AM
4. the increase in spreads also triggers more collateral calls. Resulting in a death spiral. Unless someone can get everybody around the globe to just chill the fuck out, which isn't going to happen.
Posted by guest , Sep 16, 2008 10:57AM
Could this be the end of the world? Well, if the Cubs win the World Series.......!