Spread the Wealth and Give Workers a Raise
by Mike Whitney
CounterPunch (Apri1 12/13 2008)
Insolvency's dark shadow hangs over Wall Street. One major player,
Bear
Stearns, has already gone under, and from the looks of it, another
investment giant may be on the way down. It's getting ugly out there.
The so-called TED spread {*}, which measures the reluctance of banks
to
lend to each other, has begun to widen ominously suggesting that the
money markets think another dead body will be floating to the surface
any day now.
____________________
{*} Initially, the TED spread was the difference between the interest
rate for the three month US Treasuries contract and three month
Eurodollars contract as represented by the London Inter Bank Offered
Rate (LIBOR). However, since the Chicago Mercantile Exchange dropped
the
T-bill futures, the TED spread is now calculated as the difference
between the T-bill interest rate and LIBOR. The TED spread is a
measure
of liquidity and shows the flow of dollars into and out of the United
States (Wikipedia).
____________________
The ongoing deleveraging of financial institutions and the persistent
downgrading of assets has the Fed in a tizzy. Bernanke has backed
himself into a corner by stretching the Fed's mandate to include
everyone on Wall Street with a mailing address and a begging bowl. Now
he's taken on the even larger task of fixing the plumbing that keeps
credit flowing between the various investment banks. Good luck.
There's
plenty of more pain ahead. The IMF expects the final tally will be
$945
billion, that means $3 trillion in lost loans for the banks. Bernanke
better pace himself; this mess could last for years.
Want to Save the Economy?
Full:
http://lists.econ.utah.edu/pipermail/a-list/2008-April/070987.html
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