Big Ben to the rescue (... but who's he saving?)

Well, acres of cyber-trees felled in producing views on the latest Helicopter move, but among the better are: comments in the FT under news and editorial comment.

Quite a lot to digest, but as I understand it, with the TSLF he's injected US$200bn into the system to make sure we can all sleep at nights. (But actually, it's more like freeing up liquidity that's already out there, but frozen because no bank trusts any other.)

Hence massive short covering driving markets firmer. (I thought hedge funds were sitting on low net and gross exposure? Long onlies are cashed up as much as they can, we hear, for fear of redemptions - as are, incidentally, funds of funds, for the same reason.)

3 days and USD300bn of "additional liquidity" through more new versions of the discount window later, where are we? Net of everything, the financial system will continue to function so that bank balance sheets can be matched at the end of each day (hopefully) and fire sales of (already written down but still possibly worthless) paper and the subsequent vicious cycle can be avoided.

All well and good, but as I have noted before, those who can't pay won't pay. Mortgages, even at the top of the sliced, diced and, er, securiticed tree are still risky with home values still falling. Besides, mortgage rates are still not coming down fast enough to make any difference. In fact - they're not coming down at all... Once again, those who can pay, do, and will continue to pay the penalty for their own solvency.

On balance, though, another step in the right direction from Mr Bernanke (not just another inter-meeting target rate cut) - but a small step, even at USD200bn.

(I still think the more important development is the coordination with the other major central banks. And the probability of a 50bp cut is no longer zero!)

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Well, at least the banks at risk are being looked after, right, if you look at the CDS spreads... right? Well, maybe a little bit, but it's hardly back to "normal"... and this is Merrill Lynch's 5yr USD senior, not Bear Stearns'.



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Held my tongue long enough. The cheer on the floor of the NYSE as the Spitzer news broke was distasteful but understandable. He's made a lot of enemies out there, though behind it all seems to have had some sense of where there were abuses to be fixed. US Vice President Number 9 will never be, and from now on his public persona will be as a late night punchline. And a song. (And a T-shirt.)

(On the other hand, Wall Street has lost an ally in Albany working very hard to try and sort out the monolines.)