The UK Moves First on Bank Reserves 26 comments
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Brooke Masters and Patrick Jenkins write at ft.com about new liquidity requirements proposed by the FSA (Financial Services Authority). In the first year, cash and government bond reserves of banks would have to increase by more than 1/3. It is estimated that future years could see reserve requirements more than double. This action is presumably the first of many around the world to move to shore up distressed banking systems. Such moves were agreed upon at the recent G-20 meeting.
This is reminiscent of the move by the Federal Reserve to double bank reserve requirements in the U.S. in approximately one year in 1937. This was one of the contributing factors in turning the largest GDP surge in history for 1934-36 back into a deep recession and continuing the Great Depression.
Of course, better control of bank risks is needed, but getting there through regulation alone has its risks as well. There is no free lunch. World governments have made a joint decision to "rescue" failed banks by using government funds (for many through deficit spending) to strengthen bank reserves. This approach has been chosen instead of embarking on some sort of controlled receivership and reorganization of the weakest banks. The approach taken is one that minimizes the deflation of assets on Wall Street at the expense of deflation of assets on Main Street.
The receivership process would have created more of a shock to Wall Street, but would have created an environment, in my opinion, where the deflation felt on Main Street might have been shortened. The restructured banks would have been immediately in a position to conduct commercial credit activities. That is not the situation today as banks are still scrambling to patch up their balance sheets. Bond investors and other bank creditors have been made whole. Conversion of debt to equity has not been forced by reorganization.
If the reorganization route had been chosen, it would be much less risky to double bank reserve requirements within the span of a very few years. Making these moves when balance sheet issues are unresolved poses potential stresses that may not be resolved except by continued contraction of credit.
When this crisis broke, it seems our governments thought they had a choice to resolve it the hard way or the easy way. The easy way seemed to be to "save the financial system". It turns out the easy way for Wall Street was the hard way for Main Street. The route chosen has preserved some capital interests in the preferred form of debt that should have been converted to equity. In the event that equity resulting was insufficient, the debt capital would have been lost. Doesn't that process fit the definition of capitalism?
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Hope you can find out what the heck is going on here on SA. I trumpet SA, and am responsible for more than a few new members. Now I fear I'm next in line to get the axe.
seekingalpha.com/user/...
Collectively, many of us suspect inequitable application of SA "standards" (I'm trying not to laugh) as others have had the same treatment.
What we've not been able to figure is if this is nefarious action by "low-level" grunts or supported by the top-management policy.
Other's who've been folloing this action have posted additional information.
If you've any "heft" in SA, it would be really nice to get a *public* discuyssion of this.
HardToLove
On Oct 05 04:03 PM John Lounsbury wrote:
> Mayascribe - - -
>
> I have had some very good conversations with OG. I saw a comment
> today that said OG was now User No. xxxxxx. I skipped by it and now
> am not sure where I saw it. It could be that she simply changed her
> ID. I'm going to go back and see if I can find a reply to one of
> here comments and try to find the number (if it is true she changed).
>
HardToLove
On Oct 05 04:32 PM H. T. Love wrote:
> She didn't just change it: all comments, instablogs, etc. *gone*.
> Check here for more info
>
> seekingalpha.com/user/...
>
> Collectively, many of us suspect inequitable application of SA "standards"
> (I'm trying not to laugh) as others have had the same treatment.
>
>
> What we've not been able to figure is if this is nefarious action
> by "low-level" grunts or supported by the top-management policy.
>
>
> Other's who've been folloing this action have posted additional information.
>
>
> If you've any "heft" in SA, it would be really nice to get a *public*
> discuyssion of this.
>
> HardToLove
Another victim that shared *lots* with all of us was Freya,
seekingalpha.com/user/...
who was zapped, restored (partially) and has a *lot* of detailed "evidence" of the manipulations. It might be laborious, but you may find some of her instablogs and comments worth perusing if you feel the goal is worth your effort.
I guess we need not mention Tyler Durden (ZeroHedge) who I was told is being "evaluated" sometime last month. Another great loss to the community.
HardToLove
HardToLove
On Oct 05 04:15 PM Thomas LaCour wrote:
> John, OG did NOT change her screenname, she has been informing us
> at TBP of the sudden removal of all her previous posts and comments.
David Jackson - WAKE UP! The buck stops with you. What is going on at SA with throwing OptionsGirl off of SA?
When your group of merry workers removed OptionsGirl, you also removed a key contact node for a social network on SA. Now all of that Information is gone too.
You Don't like me questioning SA's heavy handed policies? THAN THROW ME OFF TOO.
I am fed up with this heavy handed one sided censoring on SA....
This has to stop.
On Oct 05 05:22 PM User 283977 wrote:
> Here is my challenge to David Jackson I posted in stock talk:
>
> David Jackson - WAKE UP! The buck stops with you. What is going on
> at SA with throwing OptionsGirl off of SA?
>
> When your group of merry workers removed OptionsGirl, you also removed
> a key contact node for a social network on SA. Now all of that Information
> is gone too.
>
> You Don't like me questioning SA's heavy handed policies? THAN THROW
> ME OFF TOO.
>
>
> I am fed up with this heavy handed one sided censoring on SA....
>
> This has to stop.
My BS meter is pegged.
Or maybe they're a bunch of amateurs.
Anyway, for wide coverage, I'm duplicating here a post I made othre places so if you don't follow those other threads, you get it here.
"I have received a reply from contributor relations (Boaz). He thought I was crying in my beer because I lost a follower! LoL! :-))
Anyway, I filled him in on what I knew, in a general sense, and offered to pursue the matter further if he had an interest.
Highlights included: violations of TOU equitable application, "zapping" of folks with no discernible reason, failure of SA to address publicly even though team members had been made aware of issues, concerns that technical issues are a cause (I needed to offer a graceful way out and CMA in case that *really* was a cause), concerns that low-level minions were doing "nefarious" things, concern that these actions were supported by high-level management.
I'm retaining copies of the e-mails in case we need them down the road".
HardToLove
On Oct 05 05:37 PM Swashbuckler wrote:
> OG just said on TBF that she is being reinstated today on SA. She
> said SA explained that they yanked her earlier for suspected spam
> activity, which proved to be unwarranted.
This may be the entry that was needed? E-mail him folks, especially those with hard evidence. If it *is* a "low-level minion" action, Boaz will need some good "evidence".
I'll post his multiple places also.
HardToLove
As usual, the road to hades is paved with "should haves".
As for the matter of OG, I can only wish her well. I once had a similar experience, and discovered a long while later that one of the "minions" had taken a dislike to me based upon a political bias.
Administration SHOULD be able to track the actions of their workers, and spotting such a problem SHOULD be possible...
(LOL, some more of those darn "shoulda's" in there).
The problem with the latter route is that the U.S. does not, in fact, have a banking system funded by the government or a handful of economic elites; it has a system funded by its citizens. But citizens are not always the best educated in financial affairs and are subject, of course, to wild swings of emotion, fueled both by their limited understanding of matters fiscal and by the incessant prodding media.
If nature were to have been allowed, in purist fashion, to take its course and for banks to have failed, wholesale, far and wide, big and small, what would have ensued is a massive bank run that would have sucked virtually the entire money supply out of the banking system and into Maxwell-House coffee cans. The magnitude of this economic vacuum would have been beyond addressable limits by our government, or any government, and we could have all settled in for a true many-year depression, the likes of which only those who never lived through one cavalierly welcome.
Frankly, as much as I'm not a government interventionist at heart, I'm glad we're not sitting entirely paralyzed as a nation listening to some modern version of a presidential address, saying "we need only fear fear, itself."
seekingalpha.com/user/...
I too have been following Optionsgirl for some time now and was surprised she was no longer on the site. I'm glad to see she is now back.
In the future, should questions like this ever arise, it is best to contact Seeking Alpha directly (seekingalpha.com/page/...). With thousands of comments posted to our site daily, we'll be able to investigate such errors far more quickly when notified in that manner rather than within the comments section of articles. Those of you who know me are already aware that I always do my best to get you the facts as expeditiously as possibly.
Boaz Berkowitz
Director of Contributor Relations
Seeking Alpha
And sorry for the distraction, John.
I have noticed several incidents of likely "censorship" in author John Petersen's article comments.
One reader, Speculawyer was wiped off the system about a month ago.
Numerous other commenters have complained about Petersen reporting abuse for mild and innocuous counter replies.
In his latest article comments, Petersen claims he only "does it" when his commenters are abused. Which I have never seen.
I recognize that there are several persistent spammers on SA that are hard to control, but removing comments that don't violate TOU is unfortunate for everyone.
The purist method would have likely resulted in a temporary collapse of the US government and a drastic reorganization effort under martial law. Yellow cheese and wheat pasta rations would have been the daily citizens sustanance and severe energy rationing. The system would had been flushed politically and national debt default ensued. That would have been an issue for new blood to tackle with the creditors. As it stands now our creditors laugh in Tim Geitners face.
With the 'Save the System' plan, the citizens continue Chinese water torture and force the political system to change. Most likely, it will be far more violent then the purist method when the time comes. I do believe you know this.
Selling perception to the public has some value and then there is rare moments in time for the bitter truth to be known and allow the citizens access to the numbers and approach them in solving the problem. That would have flushed the political system as well. Either way it was the political system and it's citizens thrown to the wolves. The 30+ Czars in Washington and proposed regulation is preperation for a command economy, may as well call a spade a spade and say Communism. The American culture is a far cry from Eastern cultures. The results of these government decisions will not be pretty.
On Oct 06 06:12 AM Tack wrote:
> There's a constant dialectical debate on whether the banking system
> should have been "saved" or allowed to implode through normal bankruptcy
> processes and to reorganize. The purists all vote for the latter,
> of course.
>
> The problem with the latter route is that the U.S. does not, in fact,
> have a banking system funded by the government or a handful of economic
> elites; it has a system funded by its citizens. But citizens are
> not always the best educated in financial affairs and are subject,
> of course, to wild swings of emotion, fueled both by their limited
> understanding of matters fiscal and by the incessant prodding media.
>
>
> If nature were to have been allowed, in purist fashion, to take its
> course and for banks to have failed, wholesale, far and wide, big
> and small, what would have ensued is a massive bank run that would
> have sucked virtually the entire money supply out of the banking
> system and into Maxwell-House coffee cans. The magnitude of this
> economic vacuum would have been beyond addressable limits by our
> government, or any government, and we could have all settled in for
> a true many-year depression, the likes of which only those who never
> lived through one cavalierly welcome.
>
> Frankly, as much as I'm not a government interventionist at heart,
> I'm glad we're not sitting entirely paralyzed as a nation listening
> to some modern version of a presidential address, saying "we need
> only fear fear, itself."
I did attempt to contact you about a year ago and left a couple of messages. As Americans, we can either get busy on joint ventures and attempt to salvage the country or continue to compete. Here is my phone number 603-953-3388.
The economy is now the political economy. Free speech without censorship is now a cherished function of a social network. Block the spammers by IP address.
John, i lost track of what you said at this point but i did comment on it on RD.
The FSA's proposal regarding the need for UK banks to hold much larger reserves of highly liquid government securities is partly inspired by a new fetish for capital adequacy but also (and perhaps largely) by the need to find buyers for the stunning amounts of gilts that will have to be sold in coming years.
At the moment the Bank of England is buying about one half of all new public debt issuance, and the FSA's motivation in calling for the commercial banks to recognize their civic duty and buy a lot more is to circumvent the nasty situation where, if the Bank stops buying, the UK government might have to finally do what it keeps claiming it will do - but not just yet - and take real steps to put the public finances in order.