MN Fed Researchers seeking justification for Bailout

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[Kimmons]

Re: MN Fed Researchers seeking justification for Bailout

I looked on the MN fed site as best I could and was unable to locate the article (666) in question.

[JayS]

Re: MN Fed Researchers seeking justification for Bailout

I looked on the MN fed site as best I could and was unable to locate the article (666) in question.

It's linked directly in the original post, but if you are looking for it on the MN Fed's site, it's in the "Working Papers" section here:
http://minneapolisfed.org/publications_papers/wp/

Working Paper 666 (October 2008)
Facts and Myths about the Financial Crisis of 2008
Patrick J. Kehoe, V. V. Chari, Lawrence J. Christiano

[Kimmons]

Re: MN Fed Researchers seeking justification for Bailout

Jays, thanks, I actually ran a search on their sight...cam up with nothing.

[politicalfootballfan]

Re: MN Fed Researchers seeking justification for Bailout

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[c1ue]

Re: MN Fed Researchers seeking justification for Bailout

More disingenuous crap.

PIMCO and others have talked about the shadow banking system at great length.

It is very clear now that the shadow banking system was linked to the real financial system, and that the profitability of both was dependent on rising asset and commodity values.

What's happening now is classic waterfall failure - as banks get in trouble, then call in loans or discontinue further lending. This causes 'shadow bankers' (hedge funds/LBO houses/PE houses) to rein in their activities while simultaneously dropping profitability across the system.

Eventually the banks will get the wave of pain rolling through the system, but as with all good banker's - they make sure their customers feel the pain first.

[politicalfootballfan]

Re: MN Fed Researchers seeking justification for Bailout

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[c1ue]

Re: MN Fed Researchers seeking justification for Bailout

Because the data is consistent with a collapse of the shadow banking system.

1) Clearly we are seeing significant effects from lack of availability of credit
2) Bank credit figures aren't showing any type of dramatic credit decrease
3) Shadow banking doesn't figure into bank credit numbers, hence the term 'shadow'

There are other possible explanations, of course: The 'Man' or the 'Bilderberg conspiracy' are controlling everything so that we all feel there is a credit crunch.

The falling sales of automobiles, the collapse in sales of homes, the non-conforming loan interest rates of 10%, the collapse in sales at consumer discretionary retailers like the Sharper Image and Circuit City - all behind the scenes manipulations.