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Federal Reserve Balance Sheet Update: Week Of September 9
Total Federal Reserve balance sheet assets for the week of September 2 of $2,071 billion ($8 billion higher compared to the prior week's $2,062 bn) consisting of:
- Securities held outright: $1,501 billion
(an increase of $128.7 billion MoM, resulting from $32.6 billion in new
Treasury purchases, $82.4 billion increase in MBS and $13.7 billion in Agency Debt), or $10.7 billion increase sequentially - Net borrowings: $320.3 billion, a decline of $5 billion compared to two weeks prior
- Float, liquidity swaps, Maiden Lane and other assets: $248.9
billion,
an $2 billion decrease on ongoing $1 billion reduction in CPFF (an
issue discussed repeatedly by Zero Hedge) while liquidity swaps, after bottoming out recently and gradually reversing, have again declined by $2 billion sequentially.
Most notably, foreign holdings decreased by the biggest amount in almost a year, by $5.7 billion - from $2,832 billion to $2,826 bn. This is a very surprising twist, especially in light of the several very "successful" UST auctions which would have definitely resulted in an increase in foreign holdings. The reason for the discrepancy is one of those items that HR 1207 will eventually have to address.
The monetary base was virtually unchanged at $1,763 billion. Total depository reserves increased by $30 billion to $886 billion - the banks are lending even less! Didn't Geithner in testimony perjure himself by claiming how banks are lending our more than ever during the span of the recession? Exhibit A is just this number, which is the highest since the end of May 2009. The actual despoited cash is likely used by these institutions to purchase Treasuries thereby making the auctions such a sterling success (and, if they have a hun to their head - MBS and Agencies).
The ratio of Fed Assets to the Monetary Base was unchanged at 1.17x, indicating that once again the Fed is unable to extract the full benefit of its humongous balance sheet in flooding the economy with liquidity. And where does it go? Chasing shares of AIG, C, CIT, FNM and FRE of course, with the complicit assistance of a thousand identically momentum factored quant programs.
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Tyler, if you are referring to Geithner's most recent testimony...
As far as I know Geithner can say whatever he wants before the TARP oversight committee and not perjure himself since he is not under oath.
The foreign holdings drawdown is a c-c-combo breaker and any continuation in this trend may indicate trouble for our currency.
Otherwise this b.s. update just serves to show that while they may talk the big talk with exit strategy mumbo jumbo rhetoric, it is a far off fantasy. They don't dare act on their lies of recovery and take off the training wheels.
Yeah - and then they sometimes pull out the "more than it would have been if we hadn't" or "better than it would have been if we hadn't". Kind of like Obama's 1,000,000 stealth saved-or-created jobs. How ya going to prove it or disprove it?
Pete
Unrelated:China
BEIJING (Reuters) - Chinese industrial output and investment accelerated in August, suggesting the economic recovery is on a solid course, but Beijing is still unlikely to tap on the policy brakes too hard for fear of derailing it.
http://www.portfolio.com/business-news/reuters/2009/09/11/china-economic...
"Banks extended 410.4 billion yuan in new local-currency loans in August, up from 355.9 billion in July and more than expected.
Annual growth in the broad M2 measure of money supply picked up a touch to 28.5 percent in August from 28.4 percent in July, beating forecasts of 28.4 percent.
Annual urban fixed-asset investment growth also picked up, reaching 33.0 percent for the first eight months, notching up from 32.9 percent in January to July and beating forecasts of 32.5 percent.
(!!!) Deflationary pressures (!!!) eased as food prices rose. Consumer prices fell (!!!) only 1.2 percent in August (!!!) from a year earlier compared with a decline of 1.8 percent in July, tempering the pace of deflation."
By far the most WILD collection of statistical data, I ve seen this year. Do people actually believe it?
original:
http://www.reuters.com/article/ousivMolt/idUSTRE58A0TE20090911
Hanging is too good for 'em.
I am still tryig to comprehend those two:
"Annual growth in the broad M2 measure of money supply picked up a touch to 28.5 percent (!!!) in August from 28.4 percent in July, beating forecasts of 28.4 percent (!!!) .
(!!!) Deflationary pressures (!!!) eased as food prices rose. Consumer prices fell (!!!) only 1.2 percent in August (!!!) from a year earlier compared with a decline of 1.8 percent in July, tempering the pace of deflation.""
Amusing.(I used those !!! to illustrate my amusement )
jesus that's a lot of money
I've noticed a nasty tendency on this site. A tendency of negativism. With all the green shoots obviously visible for all who care to see, I believe it to be totally irrelevant that China will pop as will the US debt bubble. You people just don't understand, the economy is based on attitude, bravado, spunk and sassiness.
Yes TD, you can blast us with your seismic graphs of doom, but where's your bravado, spunk and sassiness. Come on guys, f-ck reality, let's dance!
How about we drink first (some sort of chinese liquor will do) and dance later...we're going to need to be very comfortably numb.
on the $2 beeeellion liquidity swaps decline: does this mean the fed is allocating $2 billion less to their worldwide dollar swap network?
How do these numbers compare to the plan for the Federal Reserve to buy up to $750 billion of Mortgage-backed securities and $700 billion in treasuries? How much dry powder is left and what is the projected burn rate?
Having recently found this site, I'm amazed by the content but even more by the volume (which is no slant on the analysis), particularly that produced by Tyler. Thank you. However, seeing as how he is just the alter-ego nihilist to our public conformist sobriety, the irony of selling back all this fat as soap with which to cleanse my anxiety is disturbing. I want to join, I want to contribute, but you will not let me. Now that's irony, sad stupid irony.
"Total depository reserves increased"
$886 billion earning negative effective interest
Meanwhile, those that do continue to reap 11.2%:
http://au.sys-con.com/node/1102060
Who don't wanna a piece o dat?
"A house divided cannot stand."
You know all the silly CNBC talking heads were chilly on the gold rally, in the midst of which, this AM the gold vs $$ = 1.4% up. Truly amazingly mindless. Well, who looks smart now?
"Congressman Ron Paul informed C4L... that House Financial Services Committee Chairman Barney Frank has officially agreed to hold hearings on HR 1207! The hearings are tentatively scheduled for Friday, September 25 at 9:00 am."
http://www.campaignforliberty.com/blog.php?view=24999
BOOYA!
Without analyzing longer-term trends, it's possible that bank reserves will show an uptick in reporting periods that follow month-ends. Having spent some time in a setting that runs cash/treasury operations as a banker's bank, the incoming cash-flow was always at it's highest at month-end. Two weeks later that inflow became an outflow, due to nothing more than cyclical payments being processed (ACH, debit services, etc...)
BTW...hell no they're not lending. But, it's not exactly a windfall earning 0.25% on those reserves either.
"Total depository reserves increased by $30 billion to $886 billion - the banks are lending even less!"
That's fantastic news on the hearings by Frank. Get some air in this room, it stinks in here.
I had not thought about the possibility that the banks could purchase Treasuries with excess reserves. All of the reserves are "borrowed" funds, meaning funds loaned into existence by the Fed. Those loans would normally bear interest at somewhere between zero and .25% - but, and this is where i get confused, the Fed is paying interest on those reserves at the same rate correct?
So you take a free pile of money that has been swiped into existence by the Fed's giant ATM card, and you go buy Treasuries? And that's not monetizing U.S. debt? Someone with the requisite smarts explain this please. I would also like to offer my bank account as a place to store excess reserves, should they run out of room.
There are 2 type of reserves that the FED tracks: required and excess. It is important to note that the required reserves are calculated on a 2-week reporting period (typically runs Thursday - 2nd Wednesday). A lot of the minutae is going to be covered under Federal Reserve regulation D. Venture at your own risk...nothing funner than reading bank Regs or the CFR.
http://www.reportingandreserves.org/index.html
Required reserves are the minimum, and merit a penalty if that requirement is not met or exceeded during the 2-week period (and it's all measured on an average daily balance basis)...much of the required reserves are possibly met by unposted credit balances and delayed ACH postings via the banker's bank function.
Excess reserves are quite obvious, any balance that exceeds the minimum. Excess reserves at the FED, if I understand correctly, are not available to fund purchases. In the example of buying UST, if that is done then the excess reserves are reduced.
My theory is that excess reserves are presently hoarded...just in case the bottom falls out yet again. While the FED has certainly printed money, much of it's showing up in the purchase activity for MBS and UST and Agency debt.
Hoarding excess reserves doesn't merit a big charge to risk-based capital, and the balance sheets are still tied up with all measures of crap assets as it is. Following a credit bubble with more unworthy lending decisions doesn't really solve the longer-term issue of saving more.