“We’ll come in low out of the rising sun and about a mile out, we’ll put on the music.”
In “Apocalypse Now,” Lieutenant Colonel Kilgore explains to his surfing buddy Lance the plan of attack for the airborne cavalry of helicopters. It’s one of the most famous scenes in a movie so famous it’s almost become a cliché. The helicopters come in blasting Ride of the Valkyries by Richard Wagner.
You can watch the scene here: http://www.youtube.com/watch?v=XjYhTnh6Zaw
Who knew Ben Bernanke had friends with helicopters.
Bernanke’s plan to restore confidence to the world’s credit markets is not faring well. Technical measures, like the rate banks charge each other to loan money, keep creeping up. But the most visible example of shaken investor confidence is the tepid response of global stock markets.
And can you blame them? The concerted action by central banks to open their wallets has left investors wondering, “Well just how bad is it if the Fed is begging banks to borrow money?”
If there are any distressed financial institutions that fear the stigma of borrowing money from the Fed in such public fashion, well…they are keeping quiet. Confessing is something you do in dark wooden boxes in cool drafty churches in a soft murmuring voice. Needy borrowers apparently still feel the need to wear dark sunglasses and a baseball cap when borrowing from central banks. The shame of it.
And what’s this? Flashing across our desktop is news that Citigroup (NYSE:C) has decided to bring its cash-strapped SIVs back home to the balance sheet.
The Wall Street Journal reports that, “The move could be the death knell for an industry-wide effort to create a rescue fund for the SIVs. Since September, Citigroup, Bank of America Corp. (NYSE:BAC) and J.P. Morgan Chase & Co. (NYSE:JPM) have been working to develop the fund, which was urged by the Treasury department. Although the banks have been pursuing the plan, interest has waned in recent weeks as other financial institutions began to solve their own SIV problems.”
Is this a solution? We have no idea. What is notable is that the SIVs Citi is bringing back on the balance sheet have assets of US$49 billion. That’s down from US$87 in August. Either assets have been sold or marked down…by US$38 billion.
Markets and Money