Fear of a Global Bank Run...

I know I said that I would not mind a small run on the dollar--but I said small, in order to boost exports:

The headlines are not great:

And the Fed takes another step forward. Rex Nutting and Greg Robb report:

Fed acts Sunday to prevent global bank run Monday: Acting quickly to prevent a run on major global financial firms, the Federal Reserve cut its discount rate by a quarter percentage point to 3.25% and offered to lend money to a longer list of firms than ever before. The extraordinary weekend moves came as J.P. Morgan Chase sealed a deal to buy Bear Stearns Cos. for just $2 a share backed by up to $30 billion borrowed from the Fed. The Fed board gave its approval to that unique funding arrangement, which guarantees JP Morgan against losses from buying Bear.

The Fed board also approved the creation of a special lending facility through the New York Fed that would be available to members of its primary dealers list, which includes both commercial banks and investment banks. Investment banks, such as Bear Stearns, have not been allowed to borrow directly from the Fed....

Events have unfolded at warp speed over the past week. On Tuesday, the Fed announced a new lending program for primary dealers in the bond markets, but that program won't go into effect for two more weeks. On Friday, the Fed allowed Bear Stearns to borrow money via JP Morgan in a desperate bid to save the firm, which has been pummeled by losses on exotic securities backed by subprime mortgages.

The Federal Open Market Committee meets on Tuesday. Analysts expect the FOMC to cut the target for the federal funds rate by as much as a full percentage point to 2%. Another cut in the discount rate is also likely. The new lending program would operate for at least six months, and would offer loans for as long as 90 days.... Loans from the new program would be backed by a "broad range of investment-grade debt securities," the Fed said. The interest rate would be the same as the discount rate.

"The Federal Reserve, in close consultation with the Treasury, is working to promote liquid, well-functioning financial markets, which are essential for economic growth," said Fed Chairman Ben Bernanke, in a statement. "These steps will provide financial institutions with greater assurance of access to funds"...

Comments

[capitalistimperialistpig]

It's always wise to be careful what you wish for.

[jerry]

Does anyone remember this movie?

KRIS KRISTOFFERSON AND JANE FONDA IN 'ROLLOVER'
By JANET MASLIN
Published: December 11, 1981

IS the Arab Euro-dollar really a good subject for movie banter? Somehow, somebody thought so. In ''Rollover,'' Kris Kristofferson and Jane Fonda play a banker and a board chairman who confer incessantly about financial matters at the multi-multi-megabuck level. The dramatic possibilities of the material are weak at best, and its satirical underpinnings are nowhere to be found.

...

''Rollover,'' which was directed by Alan Pakula and opens today at the Criterion Center and other theaters, works neither as love story nor as satire, and it isn't even the thriller it sets out to be. It begins with a murder, which, exemplifying the generally meandering quality of the movie, isn't mentioned again for about an hour. The killing does make a widow of Miss Fonda's Lee Winters, however. A movie queen turned mogul's wife, she is now made ruler of a huge corporation, thanks to some advice from the dashing financier Hub Smith (Mr. Kristofferson), who is described by another character as ''restless, ambitious and a sucker for a star play.'' Once Lee ascends to power, she puts in many late-night hours at her deserted office, wearing evening clothes and listening to tape recordings, in a manner reminiscent of Mr. Pakula's own ''Klute,'' a much better movie that had infinitely more sense, energy and style.

The plot here revolves around a joint venture, in which the failing bank Hub Smith has been summoned to save decides to back Lee Winters's company in a deal so enormous that the interest alone will keep the bank afloat. Along the way, both Hub and Lee independently grow curious about a mysterious bank account in which large sums of money are being hidden. This account is conveniently mentioned by number at every opportunity, so that the spying can be accomplished with ridiculous ease. Lee sees the number on some of Hub's papers, and sneaks a look at them. Hub takes the number to an adversary's computer, and fishes for information, which he locates in a trice.

At last, Hub confronts this adversary (played by Hume Cronyn, with far more dash and authority than anyone else in the movie), and a talk about Arab Euro-dollars ensues. The worldwide flow of money is envisioned as a force of nature, and there is the dark threat that if this flow is interrupted, ''in six months you'll see grass right over Rodeo Drive!''

...

If the worldwide monetary situation is indeed as bad as the screenplay makes it out to be, movies this extravagantly silly only make it worse.

[Barkley Rosser]

Not only that, but a reminder of the wisdom of Oscar Wilde's advice. This current situation might well lead to earnest young ladies dropping their cucumber sandwiches on the ground in front of the earnest young gentlemen, along with their currencies...