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US banks propped up by Fed. Who Else is Going to Lend to Them?
By admin | July 26, 2008
U.S. banks’ direct primary credit borrowing from the Federal Reserve rose to the highest level ever this week, reflecting the growing need of the banking sector to rely on the central bank, according to analysts quoted by Reuters.
On the day of July 23, banks’ primary credit borrowings rose to $17.68 billion, the highest borrowing since September 12th 2001 when banks borrowed $45.5 billion in a single day.
After all, “Who else is going to lend to them?” said Howard Simons, strategist with Bianco Research in Chicago, reported by Reuters. “The financial sector, everyone whose business is essentially lending money is now a ward of the state. They could lend to each other but they don’t trust each other. They can’t raise money in the equity market. There is nowhere else to turn,” Simons said.
I already wrote back in April about how international banks no longer trusted each other and were falsifying reports to LIBOR to hide their desperation: read the article here.
It is just a matter of time until the next US bank or brokerage goes belly up. At that point gold should be able to decouple from the current commodity complex, and be viewed as a safe haven rather than a commodity. Don’t bother with credit reports. Now looks like a great time to buy gold and get out of the USD altogether!
Topics: Banks and banking offshore, Currencies and Cash |
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