Its not just the Federal Reserve that has seen its balance sheet skyrocket — the European Central Bank and the Bank of England have also ramped up the assets they hold significant in their attempt to unfreeze the credit markets:

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Bank of England

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European Central Bank

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All charts via David Kotok, Cumberland Advisors

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Previously:
Reserves and Off Balance Sheet Securities Lending (June 27th, 2008)

http://www.ritholtz.com/blog/2008/06/reserves-and-off-balance-sheet-securities-lending/

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “ECB, BoE Assets”

  1. JustinTheSkeptic says:

    From skiing to mountain climbing. I once climbed a mountain that looked like that in Switzerland, problem was by the time I got to the top I had so much rope, I had to sell it cheap!

  2. Marcus Aurelius says:

    Funny stuff, Justin.

  3. It occurs to me…how do markets, credit and otherwise, get “frozen”? Surely all markets everywhere have a clearing price, i.e., a price at which they unfreeze. Markets are only frozen when prices get stuck, and prices get stuck when sellers think more of what they are selling than do buyers. Sellers that have the luxury of manipulating governments can just force them (government) to take the price they’re stuck on.

    Thus governments had to come in and buy at prices the sellers couldn’t get elsewhere. They didn’t “unfreeze” any credit markets. They simply overbought them.

    The real prices are still lurking out there. Once these sovereign banks begin to fail (as Roubini predicted was likely), clearing prices will prevail, and it’s not likely to be pretty.

  4. MRegan says:

    Curmudgeon-

    Thx, good comment. I would suggest that possibly there is no clearing price for some of these ‘things’ because there is no price down to which they can be marked that will eliminate their inherent negative value. Even if you pay .01 on the dollar it can fall still further and diminish to .001 wherein you lose 99% plus all the other unrecognizable costs of ownership.

    What I am trying to say is that it is possible the mere ownership of a currency (and hence any paper instrument denominated in that currency) implies a present although unrecognized total loss of value.

    There is in all of this a core problem based on the difficulties involved in an ‘assertion of ownership’. Is the reception of the pound sterling (or USD or Euro) in exchange for a good or service, etc tantamount to the acceptance of immediate loss? That is, should I be aware of that fact that the present tenance (tenencia) of a USD etc. is really a denial of almost certain loss of future value?

  5. VennData says:

    Speaking of Switzerland, we need a surge there… and to come back with 50,000-odd un-American-type names, addresses and email addresses.

  6. “Is the reception of the pound sterling (or USD or Euro) in exchange for a good or service, etc tantamount to the acceptance of immediate loss? ”

    That is the quintessential question. Here lately, it is if you value your dollars in gold. But not so much Yen. But even more so Euro’s and sterling.

    Money times velocity equals price times output. Thus, all thing otherwise equal, an increase in money with no corresponding increase in output yields an increase in price, i.e., a devaluation of money. In a fiat currency regime, money has only representative, not intrinsic, value, and its quantity can be increased at political whim, thus the charts above. In my view, the only thing right now preventing a rapid decline in the value of money is that its velocity has declined enough to offset any increases in its supply. But Justin’s mountains keep growing, and eventually the increases in money stock will outstrip declines in velocity. So, yes, accepting a dollar will one day mean accepting a future loss of value. The question is when.

  7. “But even more so Euro’s and sterling.”

    er…s/b “but less so Euro’s and sterling.

  8. Marcus Aurelius says:

    Curmudgeon:

    Astute. Being that money also represents debt, and will all of this pent-up BS being held by the central banks, who exactly will pay down these liabilities if the “new money” is not released downstream?

    Half baked thought, but the SO is ready to go to dinner. I’ll clarify later, maybe.

  9. ronin says:

    Listen you fools! This isn’t about credit, it’s about POWER! Pull your heads of your ass for a breath of fresh air… you are being enslaved….

  10. ronin catches the reason for the Season, and it is foolish to overlook that Idea–that it’s about Power/Control, not ‘Money’/Credit..

    if this situation was otherwise, we wouldn’t be at the back of the cave, responding to shadows(thanks, Plato), Information Transmission would take a, wholly, different Form and Frequency..