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Fed's Balance Sheet Increases By $53 Billion
U.S. FED BALANCE SHEET LIABILITIES GROW TO $2.125 TRLN SEPT 16 VS $2.072 TRLN SEPT 9-FED
We will provide the full spread of the Fed's balance sheet later tonight
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It's a damn good thing we aren't monetizing governmental debt in the USA.
Phewww....
that's freaking scary. Oct '87 or bust
Shiiiit! Only $53 Billion...about time they showed a little fiscal constraint!
Didn't the Treasury announce another $190 billion in tbills to be auctioned off next week?
OT -
CNBS's Brian Beers reviews Ron Paul's Book End The Fed.
Cast your vote at the end.
http://www.cnbc.com/id/32881898
it's probably mostly bonds rather than bills
although i haven't seen the breakout...in any
event it will be another highly successful
round of auctions with the cayman island
accounts ben runs leading the buying...
It's mostly MBS garbage (Fannie/Freddie/Ginnie). And the money came from a $68 Billion increase in the U.S. Treasury's general account deposits offset by a $15 Billion decline in deposits from banks. The banks may be beginning to withdraw some of their "excess reserve" deposits at the FED. My guess would be they needed it to cover some more writedowns, but who knows for sure. I imagine they will be needing back more of the extra $Trillion they put into the FED in the past 12 months. I wonder how much of that Trillion came from GS's profits from gaming the markets? After all, GS is a FED member bank now. http://www.federalreserve.gov/releases/h41/Current/
How the hell do you unwind from a $4-5 trillion balance sheet riddled with worthless junk? I guess we'll find out in about a year.
If you are the fed, my guess is you don't unwind it. You probably average down.
Remember people, assume makes an ass out of you and me. The Fed's play may not necessarily be to unwind, especially seeing as it is impossible and all.
Regardless of the average purchase price, in the end, an asset-backed security that is not worth market value will be either held or sold at a discount. I'm thinking 'hold'.
Unwind what? Kind of like asking a counterfeiter to buy back all the bills that he passed.
Who cares what the Fed balance sheet is? On the one side you have assets in the form of smelly, steamy garbage, on the other side you have Gutenberg's invention.
All the fed needs to balance its books is to have enough paper on hand to print the denominations needed to buy garbage.
Excellent post.
Do yo really think that all the people that really matter are just going to let the whole thing get flushed away?
Here's my fortune, take it, please. I'll be happier when I'm driving a cab or working a 7-11 in India.
Do you think Bill Gates is buying yen or gold or c-rations?
$1,000 for an ounce of gold is less than his
Chinese made suit or any bottle of his version of $2 buck chuck.
If we go down, everybody goes down and since we started out on top we'll end up on top even if it's a very low heap.
America was just this side of a third world country itself before WW2 ruined the United Kingdom.
+178 or so on the Dow this week. Relationship? Naaaahhhh.
+165 on the last two POMO days. Coincidence? Of course.
Indeed the only way out is through the in door
presumably
GG:
The CNBC vote to abolish the FED is 86% Y, 7.7% N and 6.1% not sure with 4812 votes cast.
GO TEAM!!
Carn't the FED just do its own debt reconciliation programme ?
This is where "FED BONDS" come in... Bernanke will unveil them shortly, and Geithner will surely find a way to do some kind of swap with the IMF.
AMERO
That's where it ends. Or something similar. Huge devaluation strips the wealth of anyone holding $$$ denominated assets. They'll make good to their important creditors (maybe) by paying them on a one for one basis.
WE may be paying off this debt sooner than you think.
CHUMP CHANGE! Tell me when it's a trillion a week and I'll look up from my coffee. Besides, deficits don't matter. How don't you know that? Sheeeesh.
Now I gotta do some math???
old article about the federal reserve as the bad bank
www.reuters.com/article/reutersComService4/idUSTRE51B42820090212
Why carn't the US do a Turkey?
A few years you could get over 1.6 million Lira to $1 USD
Then the "New Lire" was introduced & Hay presto $1 dollar cost 1.25 New Lire....
" When the Turkish Lira values are converted into the New Turkish Lira; one million Turkish Lira (1.000.000 TL) shall be equivalent to one New Turkish Lira (1 NTL)"
Problem solved !
They don't want to be audited because they are buying equities.
I would love to see Benny in those dumbass Regions Financial commercials, shaking the giant green can. It would support his policy.
Given the warning signs on the horizon, it’s plausible that Wells Fargo would try to unload some of these troubled loans on the secondary market. But according to multiple private investment shops set up to invest in distressed debt, Wells isn’t selling them. If Wells were to sell the loans, not only would the bank have to book a loss, but would also have to pay out on those pesky credit default swaps.
Instead of selling the loans, sources inside Wells commercial group told BankImplode that they have been instructed to modify loans for customers in default by adjusting the interest rate, but not change the maturity date. Why? According to Meredith Whitney, founder and CEO of Meredith Whiney Advisory Group, Wells is working an accounting game of “extend and pretend.”
“If the bank doesn’t change a maturity date, then it does not have to take an impairment charge on its books, which would affect earnings,” says Whitney. If the loans don’t look like they are impaired, the rating agencies then do not have to downgrade the billions of CMBS that Wachovia sold to other banks and investors. Moody’s backed out of such a downgrade last month, after it previously warned downgrades were coming on $4.1 billion of Wachovia Bank commercial mortgage securities because it now expects principal and interest payments to continue.
Adds Whitney “We’ve seen Wells Fargo play modification games with its own loans. Why wouldn’t they do it with the loans they took on from Wachovia?” On Tuesday on CNBC, Whitney said again “I don’t know if those commercial modifications are going to work.”
In response to analyst expressing doubts that the near $40 billion structured into the purchase of Wachovia for losses in its total portfolio will be enough, CEO John Stumpf spoke out. Stumpf told investors at the Barclays conference this week, Wells Fargo has used $2.2 billion in credits for losses from Wachoiva’s commercial mortgages, or one-fifth of the $10.4 billion in total losses it expects from those loans.
Unfortunately for investors, banks hold CDS liabilities off balance sheet and do not recognize them as a loss until they actually have to pay it. Wachovia at least disclosed in its third quarter 2008 10-K (on note 15) that credit derivatives are a regular part of how they finance commercial activities, and add that such instruments ‘don’t meet the criteria for designation as an accounting hedge’.
Given that a specific number for CDS exposure is not yet tenable, it’s hard to say how many billions are at risk. Yet most market players who follow this bank said when those CMBS de-lever and the derivatives come due, it will be a problem for which Wells is absolutely not adequately capitalized.
To give Wells Fargo credit, it might not even know the size of the problem. BankImplode could not find an analyst who covers the stock to say Wells actually has enough loss reserves built in for it, but regardless the analysts are very concerned about the bank’s health based on the data that they do see. Both Whitney and Paul Miller of FBR Capital Markets both have gone on-air and written in notes to clients that Wells’ loan loss reserves are not enough to handle coming impairments to residential loans. Miller has a recommended stock price of $15 while WFC is currently trading around $29.
So could Wells really have enough capital to handle the liability of credit derivatives that will likely come due within the year? As we watch more and more of the junior tranches of commercial mortgage back securities Wachovia sold become worthless, how will Wells Fargo afford to pay for the risk premiums Wachovia promised they’d cover of if the loans blew up? From all indications, the bank cannot meet these obligations unless it raises more capital, sells good assets for a loss, or puts more of that TARP money to use instead of sending it back to taxpayers, as CEO John Stumpf has promised. So much for “earning our way out” of the financial crisis.