" Mervyn King, who had worked out the Special Liquidity Scheme over the Easter weekend, felt confident that the initiative would solve their funding problem. 'Now is the time', he said, 'to take the liquidity issue off the table in a decisive way' " Augar, P, Chasing Alpha, pp 183-184
(Mervyn King quoted by Chris Giles, King puts his stamp on liquidity scheme, Financial Times, 22 April 2008)
With acknowledgements to Philip Augar, Chasing Alpha, The Bodley Head, London, 2009
Solvency rather than liquidity was at the core of the banking crisis of 2008 and this was known to Mervyn King in March 2008 (see below: Banking Crisis Now One of Solvency Not Liquidity). Hank and Ben were already leading the the way tackling the problem of global financial liquidity and Mervyn tagged on to himself the Special Liquidity Scheme.
Despite the BoE taking the liquidity issue off the table in a decisive way by providing UK banks and building societies with access to liquidity, and the recapitalization of major banks such as Lloyds and RBS by the State, share-holder value in these banks has virtually been wiped out.
Lloyds Banking Group
February 2007: £6.00 September 2011: 34P
RBS
February 2007: £7.00 September 2011: 22P
The stock market chart of the Dow Jones index shows that the crash of 2003 is almost replicated in 2008-2009. In 2003 there was no mention of a housing bubble collapse or sub-prime collapse and two years prior to that, the dot com crash and Enron collapse occurred.
The key to the events, beginning at the historical peak of the markets, is the exhaustion of leveraged financial trading (both banking system and the global markets) and the huge kickback surge of falling asset values that brought down some of over-leveraged giants of the global investment/financial services industry
(Mervyn King quoted by Chris Giles, King puts his stamp on liquidity scheme, Financial Times, 22 April 2008)
With acknowledgements to Philip Augar, Chasing Alpha, The Bodley Head, London, 2009
Solvency rather than liquidity was at the core of the banking crisis of 2008 and this was known to Mervyn King in March 2008 (see below: Banking Crisis Now One of Solvency Not Liquidity). Hank and Ben were already leading the the way tackling the problem of global financial liquidity and Mervyn tagged on to himself the Special Liquidity Scheme.
Despite the BoE taking the liquidity issue off the table in a decisive way by providing UK banks and building societies with access to liquidity, and the recapitalization of major banks such as Lloyds and RBS by the State, share-holder value in these banks has virtually been wiped out.
Lloyds Banking Group
February 2007: £6.00 September 2011: 34P
RBS
February 2007: £7.00 September 2011: 22P
The stock market chart of the Dow Jones index shows that the crash of 2003 is almost replicated in 2008-2009. In 2003 there was no mention of a housing bubble collapse or sub-prime collapse and two years prior to that, the dot com crash and Enron collapse occurred.
The key to the events, beginning at the historical peak of the markets, is the exhaustion of leveraged financial trading (both banking system and the global markets) and the huge kickback surge of falling asset values that brought down some of over-leveraged giants of the global investment/financial services industry
0 comments:
Post a Comment