Liquidity Crisis Quotes

Deflation can be particularly dangerous when a financial system is shaky, with household and corporate balance sheets in poor shape and banks undercapitalized and heavily burdened with bad loans.

At the end of Friday, March 3, 1933, thirty-two states had closed all their banks ... Six other states had closed almost all their banks. In the other ten states and in the District of Columbia withdrawals were limited to 5 percent of deposits and in Texas to ten dollars per day. The U.S. financial system had reached the last extremity before it would collapse completely, taking the life's savings of tens of millions of people and what was left of the international economic system with it.

Demonetisation is a disinflationary process. So, this will bring down prices in the long run. It will also help in bringing down interest rates.

A short squeeze could happen with the U.S. dollar if lenders suddenly forced debtors to pay in cash.

Typically in a panic, corporate bonds sell off as investors fear weaker growth, tighter financial conditions, or need liquidity.

Wall Street got drunk and now it's got a hangover. And the question is, how long will it sober up and not try to do those fancy financial instruments?

Most of the time, your risk management works. With a systemic event such as the recent shocks following the collapse of Lehman Brothers, obviously the risk-management system of any one bank appears, after the fact, to be incomplete. We ended up where banks couldn't liquidate their risk, and the system tended to freeze up.

Today, even small entities that trade complex instruments or are granted sufficient leverage can threaten the global financial system.

We have to make sure that the banks pay every nickel of loan losses that they create, but we don't want to hold them responsible for withdrawals if we want the economy to recover.

Liquidity problems can occur in central clearing, even if all counterparties have the financial resources to meet their obligations, if they are unable to convert those resources into cash quickly enough.

The failure of Lehman Brothers demonstrated that liquidity provision by the Federal Reserve would not be sufficient to stop the crisis; substantial fiscal resources were necessary.

I did not think I would see the day when, you know, an AIG would not be able to have its checks clear.

In an extreme credit crunch, leveraged purchases of gold cause forced sales, because any price correction triggers margin calls. As a result, gold can be very volatile - upward and downward - at the peak of a crisis.

In 1936, money had no important role. Interest rates were one-eighth of one-eighth of one per cent. I did some research, and I found that the interest on one million dollars of ninety-day Treasuries was $37. People didn't even bother to collect it. The Fed wasn't important.

When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.

Massive runs on short-term debt helped trigger the Great Recession.

In our equities business, 49 of the 50 most important Lehman clients are back doing business with us. The flows are 75 to 80 per cent of what they were prior to the bankruptcy. The issues which damaged Lehman were around commercial mortgages and illiquid private equity assets.

If you don't have ample liquidity, and it's not durable, in times of stress, as you're looking for liquidity, you're forced to sell assets at declining prices, which then eats into your capital position, so it becomes this very, very negative cycle. There's no question that liquidity is sacrosanct.

For my own part, I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.’s — I didn’t see any of that coming until it happened.

The onset of a crisis is usually triggered by a spectacular failure which shakes confidence in fictitious forms of capital.

The IMF is set up to deal with liquidity crises.

One day my wife went and saw the accountant and said she's pulling the plug. She said you guys are done. I said, how bad can it be? 10 grand? She said you're not even close. It came out to almost $50,000 in alcohol for two months.

We really believe in the earnings. We're very proud that often we do well in the down market. But you know, there are some markets where they just lose liquidity, like 2001, 2008.

The dirty little secret of what used to be known as Wall Street securities firms-Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns-was that every one of them funded their business in this way to varying degress, and every one of them was always just twenty-four hours away from a funding crisis. The key to day-to-day survival was the skill with which Wall Street executives managed their firms' ongoing reputation in the marketplace.

No bank should be too big or too complex to fail, but almost any bank is too big to liquidate quickly, particularly in the midst of a crisis.