From the Mogambo Guru: For the first time in a long time, two things happened at the same time. First, I wasn’t lashing out at a cruel world when I woke up, and the second thing is that Foreign Custody Holdings at the Fed decreased last week. In fact, it went down by a whopping $16.8 billion. I will pause a minute while you rub your eyes in disbelief at both of these revelations, as I think I speak for us all when I say that we are all dumbfounded that the Mogambo even HAS any mood other than “bad” or that foreign central banks would not want to continue to fund the appetites of a consumption-addled bunch of financial and economic dimwits like us Americans. What in the hell could they have been thinking?
The banks, since we are speaking of a real dimwitted bunch of losers, soaked up $18.2 billion of government debt in the same week, taking their holdings of that toxic asset to a new, all-time record, which indicates that their supply of smarts has hit a new all-time low, in a kind of symmetrical yin-yang banking thing. But then again, I am sure that you remember that the whole history of macroeconomic crises is always the result of banks acting like greedy morons, and that this sordid history lesson goes all the way back to caveman days, when the First National Bank of Og financed the Great Depression of the Thirteenth Year of the Rule of King Ga the Merciless, and I am sure that I do not have to recount for you the terrible aftermath, wherein all the mastodons, well, why go into that unpleasantness all over again?
And the banks are starting to increase their reserves too. Worried about a potential run? Probably not, since a bank can’t go bust these days, not as long as we have Ben Bernahnke’s magic printing press backed by the full faith and confidence of the federal government.