The Balance Sheet Account

This is intended to provide some links, mainly from today, which I think contribute to the ongoing discussion about the Federal Reserve, the Treasury, the bank bail out, and the rest of the world.

It is not intended to be comprehensive, but just an informational type view of an ongoing discussion.

Alia, in a brief post, points out that the foreign currency swap lines announced by the Fed Monday, are ntended to supply foreign currency to US banks facing withdrawals of dollars. Tyler Durden, in the blog Zerohedge, writes a piece called Bail Out For Dummies 1. In this piece Durden compares the balance sheet of US banks with the facilities which have been put in place at the Federal Reserve. He is using lower estimates of those facilities than the ones circulated by Bloomberg last week. That might be because Bloomberg is adding ones announced but not yet on line. Durden shows that while discussion goes on about the asset side of the balance sheet of the banks, the very size of the Fed's facilities draws attention to weaknesses on the liability side. He points to the same scary future then as Alia, capital flight out of the US.

William Buiter in his maverecon blog takes the opportunity to review the G20 summit in London. He thinks it was all "prittle prattle", and documents this by deconstructing the amounts discussed to show how much new money has actually been put on the table, and it ain't much at al. But he goes on to discuss what the Fed is doing acting as what he calls a "sepcial Purpose" entity or vehicle of the US Treasury, and shows how the implicit expansion of US indebtedness wll lead to default. Buiter argues that the financial side of the crisis will not run its course until the second half of 2010, and that there is another leg downward coming during the course of this summer.

Rortybomb reported on an interesting weekend discussion in a bar in San Francisco where current developments were compared with the kinds of things Enron was doing in California in 1999 and 2000.

And, to add, here's a nice graphic from Keefe Bruyette run by Zerohedge earlier today. It seems lie partially faded blue jeans to me, (or mouthwash blue swirl icecream), but the start dates area across the top and the origins and uses across the bottom.

 

 

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... would be great to build an open thread around once in a while.

 

...I agree