The Bankwatch

Tracking the consumer evolution of financial services

The irony of the date on Lawrence Summers Fed withdrawal

There is a certain irony in Larry Summers letter today in that the date is the beginning of the 3 day period 5 years ago when the world went into economic DEFCON 1 readiness.  There was an electronic run within the banking system that you and I did not learn about until later.  Lehman Brothers were bankrupt and the money system was in panic.  No bank could trust any other bank.  Money movement froze.

It was literally the banks’ equivalent of you waking up in the morning and learning that your house, your investments and your savings were worth zero, and further you still owed people money for things you believed last night that you owned.  We were a hair trigger from anarchy.

But the central banks dove in and Quantitative Easing was born. 

The irony continues later this month when the Fed comes out with its latest pronouncement and the world is watching for direction on ‘tapering’ of QE.

Larry Summers withdraws from Fed Chairmanship race

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Written by Colin Henderson

September 16, 2013 at 00:44

Posted in Uncategorized

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