Lehman's had been using this trick since 2001
Lying is what very serious people do for a living. The head nodding, think tank funding and suit wearing are just protective colouration.
BBC: ECB lends $500bn€350bn to lower rates (18 December 2007)
All banks with enough collateral, and which submitted bids of at least 4.21%, received funds from the ECB. The ECB said 390 banks across the eurozone had sought the funding. The move - making the extra cash available over the next two weeks -will ease fears of a credit meltdown over the Christmas period, when banks need extra cash.
The ECB said 390 banks across the eurozone had sought the funding.
The move - making the extra cash available over the next two weeks -will ease fears of a credit meltdown over the Christmas period, when banks need extra cash.
I mean, how is ease fears of a credit meltdown over the Christmas period, when banks need extra cash [to close their year-end books] different from Jérôme's temporarily convert securities into cash at the time of quarterly book closings, to make its accounts look better?
Lehman was using repo 105s to temporarily convert securities into cash at the time of quarterly book closings, to make its accounts look better (less leveraged, mainly). At some point it ran out of securities that its (commercial) counterparties would accept as collateral for these very short term cash loans. And that's where apparently the Fed took over, by taking in junk in exchange for fresh cash.
At some point it ran out of securities that its (commercial) counterparties would accept as collateral for these very short term cash loans. And that's where apparently the Fed took over, by taking in junk in exchange for fresh cash.
Amazing
The Lehman innovation was systematic misreporting of its solvency, repeated quarterly to give a misleading impression to markets - aided by the Fed, which presumably was doing similar deals elsewhere on Wall St.
It's the difference between a one-off loan with full disclosure, and a quick bung between friends, which is never reported or disclosed.
In the UK it's illegal for a company to trade while insolvent. Lehman was insolvent in real terms, and was hiding that fact behind a facade of misreporting, creative accounting and generous undisclosed cash handouts from Timmy.
So it is in Spain. However, a Decree was enacted on December 12 2008 providing that losses on real state investments or inventory are not computed for the purposes of technical insolvency. Just in time to close the books for the year, I might point out. The brainless should not be in banking -- Willem Buiter
