Ben Bernanke Loses More Money In One Day Than All Of LTCM Ever Did... Doubled

The ongoing collapse in bond prices is making John Meriwether blush with envy at the wholesale wanton destruction of capital undertaken by Ben Bernanke. Keep in mind LTCM - the organization which proved definitively that Nobel prizes in economics are given only to the most consummate destroyers of value, logic, reason and humility - lost "just" $4.6 billion from its peak before it became the biggest systemic risk in the world back in 1998 and had to be rescued by a consortium of banks. The bottom line: with about $10 billion in SOMA losses today alone, Ben Bernanke has generated more than double the losses that nearly destroyed western finance 13 short years ago. And nobody cares.

John Lohman explains:

Chairman Top Tick continues to crash and burn, losing $7.2 billion in Treasury and Agency paper in today’s bloodbath alone.  Adding a rough estimate for the MBS holdings would put the session’s losses well over $10 billion.  Indeed, a baker’s dozen of John Meriwethers couldn’t destroy this much capital in such a short period of time.

And with all of the usual caveats that accompany a simple modified duration analysis (ignoring convexity, assuming instantaneous parallel shifts, etc.), the table below estimates the Fed’s losses for various upward interest rate shocks.  Again, keep in mind this does not include the massive MBS portfolio, which is extending in duration with every uptick in rates.

Comments

[SheepDog-One]

Unemployment figures will start going down when the unemployed start dying off in mass.

[nathan1234]

Good chance to string him and his pals up.

And get rid of the Fed

[[e-mail]]

What does Mr. Cdad have to say?

[no2foreclosures]

A few trillion here and a few trillion there, then we are talking about some serious dough.  This amount of money that Benny lost in one day is pocket change.

[FrFacstory]

Finally, Read all the comments.. Answer me this, the main purpose of the FED is to control the money supply right? So what if they make losses? They magically make more money and its ok? Is there a otherway to get rid of the bonds they posses without holding them to maturity? They only thing i am worried about is liquidity, i am waiting till inflation hits

[hama]

I might believe they have the best interests of the taxpayers at heart.  Currently, it just looks like a bank arb play on their litigation expense which the politicians are employing to prolong the debt ponzi.
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[hama]

same position experienced with a dour sailor's chord as living thread feels like insult being added to injury... there lies man's illusion of freedom. If we die grasping for gold we feel life was exciting while it lasted. If we die retching from cold we feel cheated before and after...to the same extent, double whammied.
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[hama]

Thanks I like to sit in my hot tub with a bottle of Champagne and a bowl of chocolate chips and imagine the media spin should the Fed buy ALL the treasuries, then default.

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[hama]

Thanks I like to sit in my hot tub with a bottle of Champagne and a bowl of chocolate chips and imagine the media spin should the Fed buy ALL the treasuries, then default.

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[hama]

Thanks I like to sit in my hot tub with a bottle of Champagne and a bowl of chocolate chips and imagine the media spin should the Fed buy ALL the treasuries, then default.

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[hama]

Thanks I like to sit in my hot tub with a bottle of Champagne and a bowl of chocolate chips and imagine the media spin should the Fed buy ALL the treasuries, then default.

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[hama]

Thanks I like to sit in my hot tub with a bottle of Champagne and a bowl of chocolate chips and imagine the media spin should the Fed buy ALL the treasuries, then default.

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[hama]

Thanks I like to sit in my hot tub with a bottle of Champagne and a bowl of chocolate chips and imagine the media spin should the Fed buy ALL the treasuries, then default.

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[hama]

The normal guy/gal is scorned here but for what?? Not understanding the effect of Fukishima on the Llama prices in Zimbabwe?? If no one here can agree on anything how does a non-math or non-economic person have a hope of understanding.
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[hama]

Though you make some VERY fascinating points, youre going to have to do more than bring up a few things that may be different than what weve already heard.
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[hama]

I am not totally clueless but it is pretty complex. The issues I see discussed in almost every thread are: inflation/hyperinflation/deflation, the fed, Goldmann Sachs, Silver and Gold, other commodities, the EU and the default of Portugal at the hands of the Finns, the crisis in Japan, JP Morgan, something that I think starts.
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[pama]

Osama event would somehow distract conspiracy theorists from the issues, they are saddly saddly saddllly mistaken, its just more ammo, and the stories about dragging Osama out of the freezer for this one time advantage...........
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[pama]

EU and the default of Portugal at the hands of the Finns, the crisis in Japan, JP Morgan, something that I think starts.
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[pama]

A few idea are usually distinct with me but incredibly specific.
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[pama]

If no one here can agree on anything how does a non-math or non-economic person have a hope of understanding.
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