First Reverse Repo With Agency Collateral Conducted
A 5th sequential revese repo test conducted by the Fed, indicates either unprecedented posturing by the printer leprechaun or some legitimate concerns about pulling the trillions in banker slush funds floating around and propping REITs around 200% higher than fair value. What was odd about this reverse repo test is that for the first time, the Fed accepted Agencies, and specifically $180 million in a 2 day operation, as collateral. There is still a long way to go before the Fed is willing to reverse repo bankrupt stocks and Goldman bonus pool IOUs: the same assets which the banks have repoed out from the Fed (at par value no less...) We only partially jest about the bankrupt companies part, but since nobody except the Fed Chairman can correct us on what the haircut, and what the assets in the discount window are (the particular data is what Ron Paul is trying to get public), we will continue claiming that the Fed is allowing banks to collateralize worthless assets at 100 cents on the dollar, until such time as there is an actual fact that would refute such claims. At that point we will even gladly issue a retraction. Auditing the Fed would seem like a fair price.