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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (67950)	8/22/2007 8:07:44 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 116555

>>How does one restore liquidity by borrowing money that is not needed?<< LOL, I was kinda wondering that myself. Seemed to me that PAYING OFF a few debts around about now might "restore confidence", there really hasn't been any shortage of borrowing, just of paying back what was borrowed! Or is that an antiquated concept in the New Error....?

To: mishedlo who wrote (67950)	8/23/2007 8:37:04 PM
From: Incitatus	Read Replies (1) \| Respond to of 116555

This is either blatant stupidity or a bold face lie. I believe the latter. How can one "restore liquidity" by borrowing money that one supposedly does not need? The statement makes no sense. 1. Wall Street knows that lying... er, being "confident"... is more important than reality. (See, e.g., Cramer's tirade clip where he admits that all the funds are lying to the public, saying everything is fine, and only Cramer can tell the truth.) 2. Lots of banks are teetering on the edge of collapse. They need liquidity, but won't go to the discount window because people will realize how bad off they are. 3. Banks that don't need liquidity borrow from the Fed, providing cover to the other banks so that they can borrow without stigma. 4. The near-bankrupt banks borrow from the discount window, thereby providing liquidity to the system. That's how the liquid banks can provide liquidity by borrowing money they don't need. Isn't that it in a nutshell?