The Greatest Circle Jerk of All Times
Money being supplied to the banks is not being lent through. Banks are parking the money in short dated government securities in anticipation of their own funding requirements. Around $3-4 trillion of assets are returning to bank balance sheets from the "shadow" banking system - off-balance sheet structures - that can no longer finance themselves. In addition, banks have large amount of maturing debt (estimates suggest $1.5 trillion by the end of 2008) that they must fund. Fear of bank failure (especially after the bankruptcy of Lehman and restructuring of WaMu) and shortages of capital also limit ability of banks to on-lendFull article.
Giant circle jerk closed now.
Banks getting money from the government through its sale of more T-bills.
Then the banks buy the only safe haven on the planet,(for now) T-bills.
Banks not loaning.
Lines of credit disappearing. Businesses go bankrupt en masse. (Many
live on short-term loans.)
Massive unemployment results.
Where are the taxes going to come from to pay off those T-Bills
when most are looking for work?
The Gun in the Room blows up in the operator's face, its own gun fragments fatal.
Government debt default.
Neo pushes the reset button.
New game. New players...