Sunday, May 25, 2008

Bankrupted banks

This is a bank reserves chart. I am definitely not an economist, so I can't explain in my own words. This is a much better explanation. For example:

The chart of non-borrowed reserves of Depository Institutions (h/t CD.) Which, in English, means "bank reserves". As Chicago Dyke pointed out, what that chart indicates is that the banks are, well, bankrupt. Or, more technically accurate, since they're still in business, insolvent.(1)

Wall Street's acting like the credit crisis is over. What that chart tells you is that it isn't. As folks were saying at the time, it was never a liquidity crisis, it wasn't about just not having enough cash or near cash equivalents around but rather a solvency crisis. Institutions were insolvent.
Are insolvent.
And here is the rest of it.

1 comment:

brenda said...

It's really getting to be a chain re-action of disasters. Home foreclosures, rising cost of living, and now "bankrupted banks". Let's not forget the rising numbers of homeless people. That's something I think about quite often. I'm sure together we can make a difference, change takes time, determination, and patience. I have all of the above.