Author Topic: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes  (Read 1027 times)

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Offline OfTheCross

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What the New York Fed is doing is unprecedented in U.S. history and yet you will find no mention of it on any front page of a newspaper today. This is just a partial list of what makes this action unprecedented or highly questionable:

No Wall Street crisis has been announced to the public to explain these massive loans and Treasury buybacks;

Not one hearing has been held by Congress on the matter;

Not one official elected by the American people has authorized these loans;

The loans are not being made to commercial banks (which could re-loan the money to stimulate the U.S. economy). The loans are going to the New York Fed’s primary dealers, which are stock and bond trading houses on Wall Street who count hedge funds among their largest borrowers; (See list below. There is only one bank among the 24 primary dealers.)

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Offline InHeavenThereIsNoBeer

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #1 on: October 25, 2019, 05:47:53 pm »
Yes, the Fed is launching the next round of (don't call it) QE.

No, it's not freaking $690B/wk.  That includes up to $120B in overnight loans.  So, $600B of that number is the same $120B counted over and over, when at the end of the week the net balance is zero.

Even knocking out most of their number, it's still way too high, but with an article based on flat out lies, it's not worth putting much effort into.  If you're interested in this stuff, you'll want to know what the Fed is up to.  But don't go looking to this article for answers.
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Offline massadvj

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #2 on: October 25, 2019, 06:02:07 pm »
Yes, the Fed is launching the next round of (don't call it) QE.

No, it's not freaking $690B/wk.  That includes up to $120B in overnight loans.  So, $600B of that number is the same $120B counted over and over, when at the end of the week the net balance is zero.

Even knocking out most of their number, it's still way too high, but with an article based on flat out lies, it's not worth putting much effort into.  If you're interested in this stuff, you'll want to know what the Fed is up to.  But don't go looking to this article for answers.

Agree.  The financial markets all over the world are being artificially elevated by central banks increasing liquidity across the board, to the point that several countries are in negative interest rate territory.  Some are speculating that US Treasury Bills will also be negative interest before it is over.  I am not sure how it all ends.  Could be massive inflation, or could be deflation and depression.  In either event, it can't have a happy ending, especially with $20 trillion in debt and $1 trillion a year added to it every year for as far as the eyes can see.

« Last Edit: October 25, 2019, 07:32:00 pm by massadvj »

Offline OfTheCross

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #3 on: October 25, 2019, 06:27:10 pm »
Yes, the Fed is launching the next round of (don't call it) QE.

No, it's not freaking $690B/wk.  That includes up to $120B in overnight loans.  So, $600B of that number is the same $120B counted over and over, when at the end of the week the net balance is zero.

Even knocking out most of their number, it's still way too high, but with an article based on flat out lies, it's not worth putting much effort into.  If you're interested in this stuff, you'll want to know what the Fed is up to.  But don't go looking to this article for answers.

What's a good source for info on this?
If a well-regulated militia be the most natural defense of a free country, it ought certainly to be under the regulation and at the disposal of that body which is constituted the guardian of the national security.

Offline OfTheCross

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If a well-regulated militia be the most natural defense of a free country, it ought certainly to be under the regulation and at the disposal of that body which is constituted the guardian of the national security.

Offline Cyber Liberty

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #5 on: October 26, 2019, 07:01:01 pm »
What's a good source for info on this?

Any source you do not post, generally. 
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Offline Free Vulcan

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #6 on: October 26, 2019, 11:04:49 pm »
Part of the problem is that no one wants to buy Treasuries at this low of rate, not for the amount of debt we are floating.

I'd like to know also what these loans are for. The markets are up, there should be no crisis.
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Offline InHeavenThereIsNoBeer

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #7 on: October 27, 2019, 01:06:59 am »
Part of the problem is that no one wants to buy Treasuries at this low of rate, not for the amount of debt we are floating.

I'd like to know also what these loans are for. The markets are up, there should be no crisis.

People are definitely buying T's.  I wonder how many are buying just because the Fed said they'd be buying.

Most of the numbers quoted are for the repo markets, which is something I'm just beginning to read about.  So far, it seems like a market for very short term (like overnight) loans of cash, T's, etc, between banks to cover their positions while their investments retire and they roll them over.  For some reason (fear of holding the bag when Lehman II comes along for 1/365 of maybe 2%?), banks haven't been willing to loan to each other.

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Offline Drago

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #8 on: October 27, 2019, 04:30:07 am »
What's a good source for info on this?
You could go to the original source:  https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details#operation-schedule-parameters

It is a mix of "overnights" and term loans in the 13-15 day range. Billions, but no where near $690 billion. Looks like it is $209 billion in "printed money"/QE in the last 2 months:  https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

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Offline massadvj

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #9 on: October 27, 2019, 02:07:37 pm »
People are definitely buying T's.  I wonder how many are buying just because the Fed said they'd be buying.

Most of the numbers quoted are for the repo markets, which is something I'm just beginning to read about.  So far, it seems like a market for very short term (like overnight) loans of cash, T's, etc, between banks to cover their positions while their investments retire and they roll them over.  For some reason (fear of holding the bag when Lehman II comes along for 1/365 of maybe 2%?), banks haven't been willing to loan to each other.

There has not been enough of a market to justify the Fed's QE for some time.  The excess T-Bills are being purchased by the Fed and carried as assets of the Fed.  This means the federal government is super-exposed to high interest rates, which is a good motivation for the Fed to keep them artificially low.  If the Fed could get rates to minus, and then rein in government spending, it could solve a whole lot of long-term problems.

Offline Free Vulcan

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #10 on: October 28, 2019, 09:49:24 pm »
People are definitely buying T's.  I wonder how many are buying just because the Fed said they'd be buying.

Good question. That's worrisome if all that buying is just more or less artificial.
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Offline InHeavenThereIsNoBeer

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #11 on: October 28, 2019, 09:54:24 pm »
Good question. That's worrisome if all that buying is just more or less artificial.

If I were cynical and had no trust in the Fed I might even suggest it could be a cheap ploy to pop the yield curve into place by driving down short term yields.
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Offline Free Vulcan

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Re: Fed Ups Its Wall Street Bailout to $690 Billion a Week as Media Snoozes
« Reply #12 on: October 28, 2019, 11:19:19 pm »
If I were cynical and had no trust in the Fed I might even suggest it could be a cheap ploy to pop the yield curve into place by driving down short term yields.

They would almost have to at this point. We're running too much debt to get away with these kind of interest rates, IMO.

This does not bode well for the future.

I also wonder if these coattail buyers are also beneficiaries to the Fed's generousity.
« Last Edit: October 28, 2019, 11:22:23 pm by Free Vulcan »
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Offline OfTheCross

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If a well-regulated militia be the most natural defense of a free country, it ought certainly to be under the regulation and at the disposal of that body which is constituted the guardian of the national security.