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.
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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.
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.
AIG will be allowed to go? they’re insolvent and stealing money from the their policy holders. They’re already gone.
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.
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.
@5 Go get your dungeons and dragons fix. Only those above the age of 12 allowed to post on this blog…
WWLKD?
What Would Larry Kudlow Do?
This is going to take a hell of a lot of sham-wows to fix. I’m long Vince Offer.
preparing != deciding
@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…
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.
@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.
Switzerland coming up big with the seven large! Thanks, fags!
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?
Gross guranteed 760m of AIG debt
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awvyuzIyvVz4
lolool
is it the subprime or the CDS’s that are causing all the trouble at AIG?
this on top of the liquidity the brits put into the market yesterday.
@ 13 thanks for the laugh!!!
Are you serious? anyone listening to Greenberg???
@ 19 – yes… scary.
@5 We already do. Fnord.
@4 – why collateral, thought swaps were not collateralized?
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.
Could this be the end of the world? Well, if the Cubs win the World Series…….!