Comments on: Counterparties: Central banks’ uncanny timing A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: BrPH Fri, 06 Jul 2012 16:45:07 +0000 You can cut the basis to zero and all it will do is promote deflation. Already banks are flush with money to lend. So why would they need customer deposits?

The banking multiplier is not a push function any more than any other retail distribution is. It is demand driven. As long as there are not qualified borrowers there won’t be a significant change in the multiplier.

So this move will not “stimulate” anything any more than the endless cuts in the bank rate stimulated anything. Until there are qualified borrowers we will stay in this downward spiral. D’oh.

By: MrRFox Fri, 06 Jul 2012 05:34:24 +0000 Looking at Diamond’s testimony in (too much) detail (suggest coffee) –

What he actually said –

This is the part that gets all the ink – “”When I read the emails from those traders I got physically ill. It is reprehensible behaviour and if you are asking me should those actions be dealt with – absolutely.”
What does this actually impart? – IMO: nothing. Whether one is utterly innocent or is ‘up to the eyebrows’ in it, one is going to feel physically sick when one discovers that incriminating evidence exists and is now out there in the open. IMO it asserts nothing about Diamond’s personal complicity/innocence, though it is obviously intended to imply innocence. And saying that those who do wrong should be “dealt with” – BFD. Likewise with this part –

“The finding of the investigation, other than the things I learnt as a witness, came to me four or five days before they were published.” This just says he learned of the FSA’s findings recently – nothing else; I have no clue what that “learnt as a witness” stuff means – do you? (If he thinks this is his ‘escape hatch’ if he’s later shown to have been in on it – IMO it’s a mistake.) The intention is obviously to create the impression of lack of knowledge of the ‘fiddling for profit’ without explicitly asserting lack of prior knowledge. IMO it may well be a clever contrivance to imply innocence, but do so in terms that don’t support “obstruction of justice” charges if complicity is later proven. (Semi-full disclosure – this technique is not unfamiliar to many experienced attorneys.)

What he didn’t say –

Like weeks now I’ve been waiting to hear Diamond use the term “rogue traders” to describe the crew that did the fiddle. Still waiting. If they really were ‘rogue’, then say it – like Barings’ said it of Leeson and his crew. If they weren’t actually ‘off the reservation without authority’, then not saying is mandatory – double-crossing them would give them the ethical green light/incentive to ‘burn’ him right back.

Along the same lines – why is it so seemingly impossible for Diamond to unequivocally state in plain language that he had no knowledge of the fiddling at the time it was occurring? If true, that would be extremely likely to get him off the hook on any kind of criminal charges. If not true, asserting it would likely put him in a cell. Draw your own conclusions from the absence of any such explicit assertion by him.

In Diamond’s defense – his boys were clipping like 1 or 2 basis points on the reports to earn some dough. Not good – but it’s just a couple bp – so what? – everybody seems to have been doing it. The BoE later wanted like hundreds of bp to serve its purposes – and Barclays’ and all the others gave it to them. So, who has the right to cast the first stone?

By: dWj Thu, 05 Jul 2012 23:49:15 +0000 The correct answer for the Romney campaign was “I don’t think the American people care how many angels can dance on John Roberts’s head.”