“The Gold Diggers’ Song (We’re in the Money)” is a song from the 1933 film Gold Diggers of 1933, sung in the opening sequence by Ginger Rogers and chorus. The lyrics were written by Al Dubin and the music by Harry Warren. It became a standard and its melody is well known. Early renditions of this song include those performed by Ted Lewis & His Band and Hal Kemp & His Orchestra. The film was made in 1933 during the Great Depression and contains numerous direct references to it..
On American Public Media’s Marketplace, when they “do the numbers”, the instrumental plays to denote the financial markets closed higher. The song also appeared in a scene in Chuck Jones’s Ali Baba Bunny to evoke Daffy Duck’s greed. It appears during Homer’s fantasy sequence in The Simpsons episode “HOMR”, and gets hummed by the dean in a scene in the Nutty Professor remake…
Could the ECB auction of “unlimited” funds over three years at one percent interest rate be adequately described as “QE through the back door?” whilst not technically correct the ECB has (once again) found an imaginative way to circumnavigate its rules regarding not being seen as the bank of last resort by bailing out sovereign states. This mechanism could in theory provide unlimited funds, best guesstimates suggest up to a€600 billion take up, which is considerably more than the circa €150 bl committed by certain European countries as part of an overall IMF package. We can argue as to the ethics and advocacy, the rights and wrongs and the technical description, however, one description we could all agree on, but shhh..whisper it quietly, it’s a bank bailout and a very big one at that. We are witnessing this morning one of the largest bank bailouts in history..
At least by lending to banks as a first option the banks get to play hot potato and or pin the tail on donkey before they inevitably come back for more. Amongst all the comments published today perhaps these quotes from market analysts sum up the situation and today’s action perfectly;
Michael Hewson at CMC Markets raises concerns regarding how much of the money will be used to buy sovereign debt:
“Nobody is able to predict how much of the funding will be utilised to buy up sovereign debt and there is a strong possibility that banks will for the most part take the cheap money as replacement for maturing existing funding. With expectations building that the take up will be extraordinary the range in the consensus is a gaping one. Many analysts expect a take up of approximately €300 billion and some are predicting as high as €600 billion.
We have already seen yields in the likes of the Spanish and Italian bonds decline and the markets will no doubt continue their rally from yesterday. However, the main stickler is that the ‘solution’ is assuming a liquidity problem, while the real issue of solvency and the lack of growth remains unaddressed once again.”
At Societe Generale the feeling is that “banks can’t save the sovereigns.”
Too much hope is currently placed on the ECB’s 3-year long-term refinancing operation to ease sovereigns’ funding constraints. Our rates strategists expect strong demand at the first LTROs scheduled on Wednesday 21 December, but the potential to repair the sovereign bond market is dubious.
Capital Economics says:
Given the ongoing stresses in the banking system, we expect there to be high demand for these loans. Nonetheless, we doubt that banks in the region’s most troubled economies will go for broke and purchase vast quantities of their governments’ debt in a bid to bring bond yields down and avoid damaging sovereign defaults.