>Date: Fri, 8 Feb 2002 04:27:31 -0800
>From: "dlawbailey"
>Subject: RE: Eurodollar Statistics - banking questions
>First, can foreign banks lend out their dollar deposits and to >what
extent?
Yes, as much as their capital will allow
>Are there different reserve requirements for lending in >foreign
currencies?
Not if the lending is financed by borrowing or deposits in those currencies; if you lend dollars and borrow sterling, you have to set some aside against the implicit long dollar/short sterling position.
>I think it might be instructive vis-a-vis the Hardt-Negri >hypothesis
because
>I believe it will separate out the parts of the equation that >reflect a
>truly globalized system of private hedging and a state->backed system of
bank
>lending.
sorry you're on your own with this bit.
>Basically I'm asking some knowledgeable person to >contrast the
relationship
>a foreign lender of dollars has with the US Fed. and that >between the
Fed.
>and a domestic lender of dollars.
The Fed can exercise more "moral suasion" over a domestic lender; it can make things a whole lot hotter for them if they don't play ball. Furthermore, the Fed is lender of last resort to a domestic bank but not to the Eurodollar market (the entire worry which led to the creation of the BIS Eurocurrency Standing Committee was that nobody was sure who was the LOLR to the Eurocurrency market). So when the Fed operates on interest rates, it does so in the domestic NY money market and relies on the Law of One Price to ensure that the effect flows out into the Eurodollar. Which it does, usually, but not in times of crisis; when there is a panic, you can get wide spreads opening up between domestic and Eurodollar interbank rates, as Euromarket players who don't have access to Fedwire loans scramble to pick up dollars from anyone who will lend to them to meet their overnight obligations.
> On a similar subject, what is the
>relationship between, say, the Bank of England and British >banks which
lend
>dollars.
The BoE would not lend dollars to a bank which was short of dollar liquidity except in absolutely exceptional circumstances, as it would have to do so from its foreign exchange reserves and would be exposed to a credit loss. Typically, the Bank would only do this if the matter was important enough to be a public policy issue (a crisis at a major clearing bank) -- in general, things would have to be serious enough for HMT to indemnify the Bank. So it would act as a lender of last resort to banks systemically important to the UK /in extremis/, but would not act as a surrogate Fed, operating in dollars day to day.
The BoE's role with rspect to the euro is even more Byzantine and political .....
> Does the eurodollar market act as a market-based >Fed, >in effect?
well, yes and no. Yes when dollars are in plentiful supply, but no when the heat is on, because the eurodollar market can't print dollars and the Fed can.
>Is it an extension of the Fed?
Usually, more or less yes. It's a place to put your Fed dollars if you don't fancy paying withholding tax on them, or if your customers don't.
>It seems to me that the U.S. Fed is clearly the engine of >growth in the
>global money supply. However much cash Japan may have, >few corporations
>feel a need to have their deposits is yen. For Hardt-Negri to >be right,
>doesn't there have to be another center of money-supply >growth?
Again, on yr own here as I don't know anything about Hardt and/or Negri
>Does the case of Italy provide a good example pro or con >Hardt-Negri?
What
>does it mean for a developed, capitalist state to adopt a >central bank
>structure (seemingly a conservative force) while globalism >is supposed to
be
>providing the answers to the credit problem?
sorry -- I hope the above is a bit helpful, but I think there are too many Hardt/Negri technical terms in here for me to say anything meaningful.
dd
>Date: Fri, 08 Feb 2002 13:17:02 -0500
>From: Chuck Munson
>Subject: Re: Cooper on PA
>Ah yes, I know Marc's ilk very well
ulk, ulk.
>>And, praise Jesus, none of that damn
>> "twinkling" going on -- the infantile and wholly idiotic >>process now
>> in vogue among American activists whereby they raise >>their hands and
>> wiggle their fingers to show approval of what's being >>said in one of
> their endless, process-laden, mind-deadening meetings.
>That's because those meetings are democratic and strive >towards an
>egalitarian, non-hierarchical movement.
Oh Christ. Chuck, mate, what I was hoping to see here was an outright, outraged denial that anyone you knew ever "twinkled". If anything like the hand gestures described above actually take place, this movement is never going to be taken seriously. In the name of sanity, stop the twinkling.
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