The Oil Drum: Canada

Dragonfly41 yes I would imagine there are 'others' out there, but barely dead cat hiccups today, let alone bounce. Is there a world wide weariness to that play?

GreyZone, either you and your wife or me and mine are telepathic, up here in Canada we are considering, 'the little tin box stashed in the holler tree' for enough to last three months.

well there is that small crack-up boom in emerging market economies and the attendant financial mania that it has spawned. no wonder the financial impact of the mortgage meltdown in some developed economies is thus far "contained"

There certainly are more players than just Bernanke. The derivatives market is global and a whole range of central bankers have been pumping liquidity into the banking system, trying to stave off a systemic banking crisis. They've managed to paper over the cracks for now, but won't be able to do so for much longer IMO. At some point a firesale of financial 'assets' will be forced by circumstances, marking whole asset-classes to market for everyone who holds them (ie revealing their real market value to be pennies on the dollar at most). Central bankers won't be able to prevent that happening.

The 'hot potatoes' of bad debt have been multiplied through leveraged and spread far and wide in the global banking system, where they're embedded in most balance sheets. The interbank lending problems reflect the fact that no one knows exactly where they ended up and in what quantities - banks have no way to judge each other's exposure and so they don't want to risk making loans to each other. Rolling over short term debt like asset-backed commercial paper (ABCP) then becomes very difficult, if not impossible, which leaves short-term funds frozen. This is already spilling over into the real economy, with companies forced to access emergency lines of credit in order to continue (see the last Finance Round-Up for an arctic example).