Posts Tagged ‘Banking’
Quantitative Easing
QE is not “printing money” as it does not increase the amount of money in circulation. Handing out $100 bills would be printing money. By purchasing Treasuries and MBS, the Fed raises the price of those securities and thus lowers interest rates. And lower rates can certainly result in an increased desire to borrow. But…
Read MoreBanksters
What makes the LIBOR scandal so troubling is that the banks involved deliberately prevented us from understanding how serious the banking and liquidity crisis of ‘08 was. Had we known how high LIBOR rates were, things could have been done to limit the ensuing carnage. By lying about rates, the price mechanism was not allowed…
Read MoreBanks Behaving Badly
The LIBOR scandal is the result of greedy banks. But banks are no greedier today than they were decades ago. The difference is now banks are so big, and involved in so many activities (investment banking, commercial banking, insurance, underwriting and derivatives), they continually have large conflicts of interest and are unwilling to create meaningful…
Read MoreLIBOR Losing Relevance
The London Interbank Offered Rate (LIBOR) is losing relevance. Outstanding LIBOR borrowings have fallen 63% in the past 3 years and it has failed to capture turmoil in the banking sector due to the Euro crisis. Why? Central banks around the world have given banks cheap access to cash, banks have increased customer deposits and…
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