This page has been archived and commenting is disabled.
Fed Completes First Reverse Repo With Treasury Collateral For The Symbolic Amount Of $180 Million
$180 Million, yes, not Billion, Million, was Reverse Repoed (in a 3 day operation) by the FRBNY in its first executed Temporary Open Market Operation Test as part of the liquidity soak up process. The collateral was "Treasury", not CMBS, not stocks of bankrupt companies, but the safest of the safe securities. And even so Primary Dealers could barely part with just under $200 million. So let's do the math: excess liquidity of about $1 Trillion, and a reverse repo of $180 Million: that's just over 5000 TOMOs to go. Don't say the Federal Reserve has no sense of humor.
»
- 3883 reads
- Printer-friendly version
- Send to friend
- advertisements -
Then again - gold has fallen 7 bucks on the day... apparently the market is "spooked" by this action. Go figure.
Maybe because Jim Bunning is reaming BB by telling the truth and holding him to account.
Working hard to soak up that liquidity. Surely, it's not as easy as going "all in" in gold. Right?? The CMBS market soon to collapse will soak up a lot of this liquidity in due time. Me thinks.
Treasuries? That's a bit like performing a shakedown cruise in drydock.
Is the effect felt on the delivery date or the maturity date?
How does a tri-party arrangement differ from a simple Fed operation?
Per Fed web site, the tri-party repo uses a thrd party to hold the collateral and the payment during the transaction.
Why? It *sounds* like a method for handling counter-party risk, but since the Fed is the counterparty in this case, why could they not just take care of it? I mean, who does not trust the Fed as a counter-party?
Perhaps the whole tri-party thing is just another way of getting the Primary Dealers in on the action, so that they can make a profit along the way. I would not be the least surprised, but still disgusted, if that is the reason.
Tri Parties often used with risk of default.
JB to BB: In short, you are the definition of moral hazard,
creating zombie banks enriching only their traders
and executives, sowing the seeds for the next bubble:
(Treasuries and gold). The AIG Bailout alone is reason to
send you back to Princeton...
Dodd asks Ben about Roubini
Ben responds Mr. Roubini is very pessimistic about the economy
I like how Ben talked about how the Fed needs to address the financial services world as a whole (from a systemic-risk perspective) but then talks about how monetary policy is made with the focus on the US with no regard to other foreign markets. I forgot the dollar was only used in the U.S.
Mr. Shelby does seem a little arrogant though.
And Dodd wasn't sure how to pronounce Roubini. Has this guy ever watched TV or in interview? Sounds totally disconnected. Guess that should surprise no one.
Toilet paper in the bowl.
and Ben plays the BofA payback card - perfect timing
truly, that makes me want to puke...like, nobody can see through this charade?
thanks for the info on this as i haven't been watching but it is good to know that bernanke played that card...how incredibly laughable.
You'd only need to cut a corner off a Sham Wow to mop up this amount of liquid.
But at least the Fed can now say the liquidity reversal is underway with great success !!
Yippeee !!
indeed. you see, it was MILLIONS!!!
Question: Can the Fed soak up liquidity by selling some of its gold reserves?
hmmmm - WH didn't get an advance on the unemployment rate. One wonders then why they suggested an uptick in the unemployment number (10.5% anyone?)
I eagerly await the advance NFP number to be released by GS at some point this afternoon.
Pres Lyndon Johnson used to insist that he be allowed to review unemployment numbers before release and he did change them.
the WH announcement is remarkable today....confirms for me that they are setting up stimulus version whatever number we are on now. Rahm finally realized that they can't float the markets and keep the charade going through the mid terms.
let her crash now, go for another "surge" of stimulus, and rebuild into the mid terms.
chatter is $300B next spring. of course they must deal with debt cieling b/f then.
And that pesky health care reform thingy needs to be in the bag, too.
Something is getting way overdue to give out.
Ah, that inconvenient debt ceiling.
Time to buy gold?
Bingo
This is part of the strategy that FED wants to undertake slowly and gradually
http://www.financialsense.com/fsu/editorials/2009/0729a.html
Also read the editorial on the WSJ
regards,
http://www.financialsense.com/fsu/editorials/2009/0729a.html
and the editorial in the WSJ on 21st july 2009.
this is part of the FED strategy to slowly and gradually suck the excess liquidity and pump up the reserves