More good news from the financial front …
According to Reuters, “Wall Street banks are facing a ‘systemic margin call’ that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages.” Now this might not be such a bad deal if it weren’t for the fact that U.S. banks have spent the last year borrowing from the Federal Reserve’s “slush fund”, while corporate icons like Countrywide have secured over $50 billion in advances from the federal government.
On their own, borrowing and margin calls are not a problem. But with a collapsing dollar, rising fuel costs, the subprime mess, record debt levels, a collapsing housing market, and major bank write downs, among other developments, history tells us one thing: Margin calls and major institutions using the fed’s money to squirrel away cash reserves or prop up profits are probably not a good thing.
- Mark
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