Central Banks Pour Liquidity into Credit System as Dow Plummets

Oh la la…

Is our Crash Alert flag still flying? Yes, it is…flapping in the breeze…almost proudly this morning.

On Thursday last week, the Dow lost 387 points. The reason for the beating? “Subprime concerns,” say the papers.

Perhaps the most immediate concern came from an unlikely source – France’s biggest bank, BNP Paribas. The bank has followed Bear Stearns (NYSE: BSC) by sealing two of its funds; for the moment investors are stuck.

“The complete evaporation of liquidity in certain market segments of the US securitisation market has made it impossible to value certain assets fairly regardless of their quality or credit rating,” BNP Paribas said in a statement.

But don’t worry, dear reader. All is well. How do we know? George W. Bush said so. He says he is “confident,” that our modern markets “will work through these issues”.

Everyone is confident. Because we are all true believers in the Theology of Capitalism. But just in case this capitalism thing doesn’t work out, the Bank of Japan, the Bank of Canada, the European Central Bank and the Fed all joined to say that they would put some additional liquidity into the system. The ECB, for example, announced that it would make “unlimited” amounts of money available at 4% interest. The idea is to protect the financial system from a serious mishap. In a truly capitalist world, of course, there are no protections. People get neither what they want nor what they expect. Instead, they get what they’ve got coming. But the world’s banking cartels have stepped in to fix the credit system and make sure real capitalism doesn’t happen.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

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