• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

FHFA's DeMarco on the FHLB's - Ugly

Bruce Krasting's picture




 
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Thu, 04/29/2010 - 11:01 | 323601 McGriffen
McGriffen's picture

It's a system-wide concern, obviously, but isn't that also a case of several bad apples creating the most problems?  Seattle, Chicago were the two (2) main culprits (non-agency MBS owned, capital losses) I am wanting to recall.

Those advances...FHLB holds a secured/collateralized position and the system lends to insurance outfits as well (ie, not all community banks heading for the crapper).

FHLB generally won't lend vs below-investment grade securities or collateral.

Thu, 04/29/2010 - 10:20 | 323514 whatsinaname
whatsinaname's picture

so why do interest rates stay so low inspite of all this crummy news ? Are American savers doing a Japan on the bond markets in addition to the banker shenanighans of pouring Fed money into USTs ?

Thu, 04/29/2010 - 10:44 | 323568 Rogerwilco
Rogerwilco's picture

Real interest rates are negative -- we are in a deflationary spiral, something Ben Bernanke vowed would never happen here. Rates may even go lower from here. They poured gasoline on the smoldering ashes last year, but the fire hasn't blazed up like they planned.

Thu, 04/29/2010 - 14:23 | 324139 Panafrican Funk...
Panafrican Funktron Robot's picture

It was rather hilarious to see the currency component of the M1 and the MZM accelerating their movement opposite eachother.  Helicoptering currency into a bottomless pit doesn't change the nature of the pit.

Thu, 04/29/2010 - 09:49 | 323456 Rogerwilco
Rogerwilco's picture

The third path is they put loudmouths, complainers, and protesters in jail, and the party continues as before.

Thu, 04/29/2010 - 09:35 | 323438 Madcow
Madcow's picture

Either asset prices correct to pre-1980 levels,

Or the USD collapses.

If someone could articulate a third path, i'd love to hear it -

Thu, 04/29/2010 - 08:52 | 323381 sangell
sangell's picture

Seems that virtually every government agency these days is nothing but a place to stash losses. When does the Pentagon fess up that it too is holding billions in MBS?

Thu, 04/29/2010 - 08:35 | 323349 Sudden Debt
Sudden Debt's picture

At this point you just stop counting

Thu, 04/29/2010 - 08:29 | 323338 Problem Is
Problem Is's picture

Excellent Bruce.

Thanks for actual facts, figures and analysis... instead of sweaty bald headed Cramer the Clown bluster... Of course I guess you could have added:

"Investments ?? HaHaHa... $284,351"

Thu, 04/29/2010 - 10:18 | 323510 Mitchman
Mitchman's picture

They just forgot the word "Illiquid" as a modifier.

Thu, 04/29/2010 - 11:01 | 323600 Fish Gone Bad
Fish Gone Bad's picture

They could mark the kazillion $ investment to zero and the Fed will backstop them.  There are truly no (apparent) consequenses for bad behaviour.

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