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NY Fed Announces More Reverse Repos Coming, Spooks Stocks
After the first repo test was a complete failure, the FRBNY has decided to try one more time. However, unlike the large test conducted before, this time the Liberty 33 (in the words of Jeffrey Lebowski "That was me... and 32 other guys") "plan to conduct a series of small-scale, real-value transactions with primary dealers." Anything coming from the New York Fed that has the "real value" stigmata attached to it makes one wonder if April 1 came late this year. We can not wait to report on the near-certain failure that this particular round of repo tests will once again be proven to be, as banks simply can not wait to onboard the toxic filth they so graciously have handed to US taxpayers over the past six months.
As noted in the October 19, 2009 Statement Regarding Reverse Repurchase Agreements, the Federal Reserve Bank of New York has been working internally and with market participants on operational aspects of triparty reverse repurchase agreements to ensure that this tool will be ready if the Federal Open Market Committee decides it should be used. In the coming weeks, as an extension of this work, the Federal Reserve Bank of New York plans to conduct a series of small-scale, real-value transactions with primary dealers. Like the earlier rounds of testing, this work is a matter of prudent advance planning by the Federal Reserve. It does not represent any change in the stance of monetary policy, and no inference should be drawn about the timing of any change in the stance of monetary policy in the future.
These forthcoming operations are being conducted to ensure operational readiness at the Federal Reserve, the triparty repo clearing banks, and the primary dealers. The operations have been designed to have no material impact on the availability of reserves or on market rates. Specifically, the aggregate amount of outstanding transactions will be very small relative to the level of excess reserves, and the transactions will be conducted at current market rates.
The results of these operations will be both posted on the Federal Reserve Bank of New York’s public website where all temporary open market operation results are posted and reflected as a liability in tables 1 and 9 in the Federal Reserve System’s consolidated balance sheet statements.
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Mr. Brian Sack there is a Deep Shah for you on line 7.
More masturbatory exercises by the Fed
and the Federal Reserve is now willing to give a hand and help YOU out.
"FREE TIPS YOU CAN TRUST FROM THE FEDERAL RESERVE": Pay your credit card bill on time or you may get a late fee!!! You're burning Benjamins.
Commercials to air in movie theaters across the USA:
http://www.federalreserveeducation.org/pfed/finEd/creditCardAd.htm
http://www.wkowtv.com/Global/story.asp?S=11579168
Well, the only way to justify a PR department in Government, is to actually produce some PR. Then you are good to go.
Although, I would have expected the FDIC to take up the consumer protection mandate. They did release some reassuring spots on how the FDIC insurance fund is solvent, and your deposits are safe?
The FED Pink Panther-ish music was interesting in its mood of, watch out, banks are sneaky they will charge fees.
The whole FED commercial thing is just too bizarre. I find it a little creepy. Like a back stabber. They smile in your face, then stab you in the back. Like I said, creepy!
Triparty reverse repos have many risks, from who marks
assets to market to interbank defaults.
Perhaps consider this the frosting on the iceberg that
sank Titanic...
http://www.jubileeprosperity.com/
All part of the "we're serious about keeping everyone guessing" facade
they'll be buying crap for the next 3 years minimum
forget repos, worry about how else all the losses will be realized
Are you kidding me?Just a small announcement like that cause an instant 11 point drop in the market?But I thought those are fundementally valued. And the real question now becomes;does that mean that the fed would have to keep supporting the market through the different liquidety program?And whatwould be the cost of such support and for how long(considering that we might have a longer winter than the Russian one)?. If only an announcement causes this drop,what would be the cost of a real operation of draining liquidity?. Tell you what,here is a deal:Instead of injecting liquidity in the market in the hope that retirees get their networth back,give that liquidity to the retirees in return for their stocks,and let the street keep the stocks. At least after that,they will not have that sword constantly hanging over people's heads...........
We're going to slide it in just a little more, see how it feels. We won't go all the way, honest. Just hold still, it'll be okay, you'll see.
YES... my god, who hasn't used that line.... and sometimes it works on the unsuspecting.
The Fed thinks each and everyone of us is stupid and that we should not have a say.
"Just sit back kiddies and let the grownups do their thing."
I believe that is called playing a little game of "Just the tip".
The oligarchy continues to talk to us like we are children (no accident), and that if we are having anxiety issues, we just need to trust the experts some more, is all!
I like Jesse's take as well:
http://jessescrossroadscafe.blogspot.com/2009/11/draining-swamp-feds-tri...
Can anyone explain why a reverse repo would fail? The latest fed data suggests that reserves of member banks exceeds 1 trillion.
That's what I was wondering, insofar as I understand how the mechanism works. What's the difference, if the Fed "sells" the sludge with a promise to repurchase? What is the huge risk to the Fed's co-conspirators? Seems it's the least they can do to help the game of extend-and-pretend along. Anyway, didn't I hear Chairman Ben say in a recent speech that the Fed's MBS portfolio was "high quality?" Think so. So not to worry, it's all good.
That is exactly right, although the co-conspirators are marching to the beat of their own drum. For example the Fed's liquidity was meant, I think, to be injected into the economy, but so far - at least according to the reserve numbers - this appears to be backfiring. Everyone is sitting on cash and this is perhaps the argument that can be made by the deflationist camp that just because Ben prints, does not mean that we will necessarily see inflation. This money must be distributed by the banksters and so far they are spooked.
Still dont see why a reverse repo fails here.
apologizing in advance for the stupid question. are the tri-part rev-repo's going to be open ended? and if so, is this just another way for banks to unload all their garbage (like the MBS/ABS junk) that the fed has been "holding" under the quantitative easing program/scam?
"operational readiness": ability which allows the FED to spring into action when their eagle eye notes any market abnormalities.
+1
I guess I missed the class on the operations of the credit market. What does it all mean? Is it time to come out of my basement with my food, guns, and gold?
this may be why 5YR UST CDS were firming when you charted them v the DXY the other day. The dealers borrowed money from the Fed to load up on 2% coupon carry. Now the Fed is asking for that money back (in a rev repo). What's a dealer to do but unwind the carry in order to loan the Fed the money? Now what happens when 1.7t of freshly issued treasuries with WAC of 1.5% are under water? puke fest
TD, in your opinion, why would the FED announced Rev Repo test spook equities? What's the linkage?
Thanks
Tylers on a roll today!
This may link back to Bob Chapmans announcement on Thanksgiving that his inside sources where saying the fed was gonna force all the liquidity out of the banks come 2010 , that and the FDIC is going to go away..
Per the above article:
Like the earlier rounds of testing, this work is a matter of prudent advance planning by the Federal Reserve.
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So the Fed will give primary dealers essentially free money (fist hit of drugs) to buy trash, then the Fed will unload said trash (make them the dealers of drugs).
The Federal Reserve forgot the first rule of dealing drugs. Soon the Primary Dealers will fall victim to the same mistake:
"Don't get high on your own supply." -- Tony Montana