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Treasury Quid To Banker Pro Quo: "You Can Raise Dividends If You Buy My Toxic Mortgages"

Tyler Durden's picture




 

To all those wondering why the Treserve scrambled on Friday to allow banks to resume paying dividends (even something as downright hilarious as Citi's $0.01...Is that the lowest recorded dividend yield in history?) here is your answer. The Treasury just announced it would sell its $142 billion MBS portfolio, supposedly to the same banks who are now using their cash on the books to satisfy shareholders too. The Treserve will sell $10 billion per month depending on market conditions, meaning a downtick in the market will now crash not only that given day's POMO (a UST market operation), but also have a reflexive impact on the entire MBS trading complex. As usual we can't wait for Directive #1 which will make selling any share an act of treason.

From MarketWatch:

The Treasury Department said Monday that it will begin to sell its
portfolio of $142 billion in agency-guaranteed mortgage-backed
securities. A senior Treasury official said the department plans to sell
up to $10 billion in MBS per month subject to market conditions. The
sales could generate a profit for taxpayers of about $15-$20 billion as
market conditions have improved, the official said. Congress gave
Treasury the power to purchase the securities guaranteed by Fannie Mae
and Freddie Mac to provide stability to financial markets during the
financial crisis of 2008. The official said the sales were not related
to the looming debt ceiling.

As usual the only loser here is the taxpayer, as banks will very soon have dangerously low cash and capitalization levels, meaning the next downturn, which nobody will have seen coming, will result in another cool 10-20 trillion in pieces of linen thrown at it, and another 10-20% drop in the value of the former reserve currency.

 

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Mon, 03/21/2011 - 09:44 | 1081426 lizzy36
lizzy36's picture

Not that this move by treasury has ANYTHING to do with the debt ceiling. ;)

Mon, 03/21/2011 - 09:59 | 1081481 Bananamerican
Bananamerican's picture

really?

are repups more likely to continue caving on the debt ceiling, making token "fiscal responsibility" noises/gestures in the process or...?

"the next downturn, which nobody will have seen coming, will result in another cool 10-20 trillion in pieces of linen thrown at it"

Really? Isn't THAT the point the amerikan peeps go mubarak?

Mon, 03/21/2011 - 10:18 | 1081578 Larry Darrell
Larry Darrell's picture

Threadjack

The banks must have forgot to make their payments to the Supreme Court members.

Because the SC just ruled that the FED has to release the list of banks that received emergency loans.

Mon, 03/21/2011 - 10:40 | 1081679 Catullus
Catullus's picture

This is the biggest circle jerk ever.

Mon, 03/21/2011 - 11:02 | 1081778 chunga
chunga's picture

Smash the title insurance companies. Check the docket below.

http://www.scribd.com/doc/50983614/Fight-Club-Lawyer-Redux

Mon, 03/21/2011 - 10:40 | 1081682 disabledvet
disabledvet's picture

or a war on...er...IN...IN Libya.

Mon, 03/21/2011 - 09:45 | 1081428 sudzee
sudzee's picture

Looks like the Treasury is now bailing out the FED.

Mon, 03/21/2011 - 09:45 | 1081430 John McCloy
John McCloy's picture

   I am all for that. Load them back up boys and get em while they are hot. Looks like the great unwind is about to commence and judging by the reverse repo experiments noted on ZH last year I am sure it is going to go Swimmingly.

Mon, 03/21/2011 - 09:46 | 1081432 mtomato2
mtomato2's picture

Directive #1.  I love it.  Atlas Shrugged, anyone?

Calling John Galt.

Mon, 03/21/2011 - 14:09 | 1082458 Go Galt. Please.
Go Galt. Please.'s picture

Directive #2: You can't sue anyone over these MBS. Even if there's no mortgages backing the security

Mon, 03/21/2011 - 09:50 | 1081453 TradingJoe
TradingJoe's picture

Low Volume Dead Cat Bounce! IMHO the LAST ONE!

Mon, 03/21/2011 - 09:55 | 1081465 Cdad
Cdad's picture

Agreed.  Shaka, when the walls fell!

Mon, 03/21/2011 - 09:53 | 1081463 silvertrain
silvertrain's picture

"as banks will have dangerously low cash and capitalization levels" 

 Isnt our treasury{as reported by zerohedge a few days ago} already out of cash? Are we waiting on auctions this week? Anybody have a followup on that deal?

Mon, 03/21/2011 - 09:54 | 1081470 Cognitive Dissonance
Cognitive Dissonance's picture

The sales could generate a profit for taxpayers of about $15-$20 billion as market conditions have improved, the official said.

I thought the US Government was a non-profit organization? Oh wait a minute, now I get it. This is our share of the vig? I'm a little slow at first but I eventually catch up.

But wait a minute. Didn't it cost us like a Zillion Billion dollars to make that "profit"? Now I'm really confused.

Mon, 03/21/2011 - 10:01 | 1081494 Cdad
Cdad's picture

Brother CD,

It would seem that your dissonance is coging you.  Suggest you chuck back a handful of Pfizer products...it should straighten things out for you so that you can see the beauty of the Ponzi Fed more clearly.

The new American Marxist/Banker party asks that you quit sweating the details. 

Mon, 03/21/2011 - 10:10 | 1081537 Cognitive Dissonance
Cognitive Dissonance's picture

Federal Reserve marching orders. "Don't worry, be happy."

Roger that. Where's my morning dose of Valium?

Mon, 03/21/2011 - 10:19 | 1081587 Cdad
Cdad's picture

Mmmmmmmmmmmmmm.  Valium.  Personal favorite. 

Now that you are feeling better, get out there and buy some casual dining stocks!  They look historically cheap, I'm tellin' ya...ripe for criminal syndicate Wall Street banker/Marxist  upgrades.

Mon, 03/21/2011 - 10:20 | 1081596 FOC 1183
FOC 1183's picture

forget valium and go straight for the 714s

Mon, 03/21/2011 - 10:26 | 1081620 Cognitive Dissonance
Cognitive Dissonance's picture

I suspect it speaks volumes about me that I instantly knew that 714s meant Quaaludes. :>)

 

 

Mon, 03/21/2011 - 10:31 | 1081645 FOC 1183
FOC 1183's picture

yes it does.  and probably means we had the same foggy adolescence.

Mon, 03/21/2011 - 11:03 | 1081782 LowProfile
LowProfile's picture

Drugs 'r bad, mmmmkay?

Mon, 03/21/2011 - 11:24 | 1081852 bookwurm
bookwurm's picture

"Better living through chemistry"

Mon, 03/21/2011 - 11:37 | 1081896 Cognitive Dissonance
Cognitive Dissonance's picture

Not foggy. Thick as pea soup. :>)

Mon, 03/21/2011 - 10:45 | 1081697 disabledvet
disabledvet's picture

i hear "some of these boondoggles are so big you can drive an Abrams through them."

Mon, 03/21/2011 - 10:10 | 1081544 Joe Davola
Joe Davola's picture

Didn't it cost us like a Zillion Billion dollars to make that "profit"?

 

Don't worry, they'll make it up in volume.

Mon, 03/21/2011 - 10:20 | 1081597 Cognitive Dissonance
Cognitive Dissonance's picture

Maybe it's my simple mind, but every time I see that phrase about how someone will turn a loss on each sale into a profit by way of volume, the absolute and shear absurdity of the entire proposition makes me laugh out loud. Yet the brilliance of the con is remarkable because people swallow the bullshit.

Mon, 03/21/2011 - 10:13 | 1081551 DaveyJones
DaveyJones's picture

I prefer to call it our share of the viag

Mon, 03/21/2011 - 10:27 | 1081627 Hero Protagonist
Hero Protagonist's picture

I wonder if the sales will be subject to the same taxpayer guarantees as the FDIC "loss share" program?

http://www.fdic.gov/bank/individual/failed/lossshare/

 

Mon, 03/21/2011 - 11:39 | 1081906 Cognitive Dissonance
Cognitive Dissonance's picture

He who owns the Fed makes the rules. Everyone else lives by them. Time for a peaceful revolution.

Mon, 03/21/2011 - 11:08 | 1081796 Overpowered By Funk
Overpowered By Funk's picture

Remember this...

http://www.zerohedge.com/article/guest-post-how-ny-fed-gifted-extra-157-million-wall-street-yesterday

The Fed giveth and the Fed maketh banks do whatever they want. Bought and paid for - by us sorry taxpayers of course.

Mon, 03/21/2011 - 09:56 | 1081471 Boilermaker
Boilermaker's picture

I love a good old fashioned debt daisy chain.

This is fucking ridiculous.

Oh shit, the DOW is climbing like a tomahawk!!!  Everyone in the deep end of the pool!!

Mon, 03/21/2011 - 10:15 | 1081569 Long-John-Silver
Long-John-Silver's picture

Tomahawks eventually plow into something on the ground and explode creating a crater.

Mon, 03/21/2011 - 10:28 | 1081624 Boilermaker
Boilermaker's picture

Not these.  They simply go into orbit and continue on unabated into the unknown universe on inertia.  They are the new and improved version.

Mon, 03/21/2011 - 09:55 | 1081475 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The game will go on as long as it has to.

lol

Mon, 03/21/2011 - 10:08 | 1081533 Boilermaker
Boilermaker's picture

Exactly.  What's more is that they'll simply ramrod it harder as it gets worse, literally.  Once it's not real then it's not real.  There isn't anything to try to feign now, especially credibility.  Everyone knows it's bullshit so why not just go for it.

Mon, 03/21/2011 - 09:56 | 1081479 lsbumblebee
lsbumblebee's picture

Change "portfolio" to "heap".

Mon, 03/21/2011 - 09:57 | 1081484 Yen Cross
Yen Cross's picture

Calling Tokyo. Come in Tokyo!

Mon, 03/21/2011 - 10:01 | 1081493 Boilermaker
Boilermaker's picture

That's only interesting if you twisting on some chicks nipples while she puts her arms behind her head and swings back-and-forth like a radar dish....then, it gets interesting.

Mon, 03/21/2011 - 10:05 | 1081506 Bananamerican
Bananamerican's picture

"domo arigato mr. bu-kka-ke...but we are busy with our own meltdowns"

Mon, 03/21/2011 - 09:58 | 1081488 Boilermaker
Boilermaker's picture

In more standard daily news, the REITs are back to their moon shot trajectory.  Good news, bad news, no news...fuck it, SPG deserves a triple digit multiple or more.

I thought the 'reinstitution' of the dividends in the financials would peel away a layer or two of the REITs.  How fucking stupid of me.

Mon, 03/21/2011 - 10:08 | 1081527 Yen Cross
Yen Cross's picture

The commercial REITS are suffocating at best. So that is your backgrownd?

Mon, 03/21/2011 - 10:10 | 1081545 Boilermaker
Boilermaker's picture

Suffocating???  On what, their astronomical valuations and declining assets?  IYR is right back to it's high.

Nothing can suppress the awesomeness that is CRE.  NOTHING!

Mon, 03/21/2011 - 10:18 | 1081584 Yen Cross
Yen Cross's picture

Thanks for being Honest!

Mon, 03/21/2011 - 10:25 | 1081622 Boilermaker
Boilermaker's picture

That's my whole motto!

Mon, 03/21/2011 - 10:00 | 1081489 truont
truont's picture

This shell game of toxic feces will not fool anyone, Geithner...

Mon, 03/21/2011 - 10:04 | 1081509 Boilermaker
Boilermaker's picture

No, it won't.  But it will cornhole the shorts, right?

Remember, it's not a lie if you believe it.  Obviously, the equities markets are the one and only game in town.  It doesn't have to represent anything, actually.  Most people don't even know what equity is.  They only know their 401(k) statement was larger.

Give credit where credit is due, they are subduing the masses quite well.

Mon, 03/21/2011 - 10:12 | 1081546 Yen Cross
Yen Cross's picture

I like you but lose the 401k theory.

Mon, 03/21/2011 - 10:18 | 1081577 Boilermaker
Boilermaker's picture

LOL, it's all about the 401(k)'s.  I would say that 95% of people in 401(k)'s don't even know what they 'own'.  It's just the system was provided to them and they were told to participate.

It's a way for the banks to recapitalize without congressional approval and to silence the masses while they do it.  Yes, they'll be the eventual bag holders.

Try to have a logical discussion with Betty the admin assistant about why pushing up the equity markets is wrong.  She'll immediately point to her 401(k) statement and have a deeply confused look on her face.  Then, when the discussion gets complicated, dismiss you and say "well, it's up, that's all I know".

Mon, 03/21/2011 - 10:16 | 1081572 DaveyJones
DaveyJones's picture

"it doesn't have to represent anything, actually"

at least it lives up to its expectations 

Mon, 03/21/2011 - 10:19 | 1081583 Boilermaker
Boilermaker's picture

I've found it to be very loosely based on nothing.

Works like a charm.

Mon, 03/21/2011 - 10:00 | 1081495 Yen Cross
Yen Cross's picture

ps those fanny freddy (bitches) can eat shit!

Mon, 03/21/2011 - 10:01 | 1081497 sudzee
sudzee's picture

Whats the market value of 124 billion of MBS?

Mon, 03/21/2011 - 10:13 | 1081560 Joe Davola
Joe Davola's picture

Whatever their model says it is.

Mon, 03/21/2011 - 10:30 | 1081632 Yen Cross
Yen Cross's picture

My cost. Ten cents would be respectful. The true bid 2.5

Mon, 03/21/2011 - 10:02 | 1081503 r101958
r101958's picture

Any idea what that sudden bump up to the dollar was all about?

See here at 9:30 ish:

http://quotes.ino.com/chart/?s=NYBOT_DX&v=s

Mon, 03/21/2011 - 10:12 | 1081555 Yen Cross
Yen Cross's picture

Do I need to answer the the reserve currency issue?

Mon, 03/21/2011 - 10:27 | 1081626 Richard Head
Richard Head's picture

Sure, "reserve currency" explains a brief intraday move.  Thanks!

Mon, 03/21/2011 - 10:38 | 1081663 Yen Cross
Yen Cross's picture

Do you work for The first in first out kids?

 

Sorry for the spellng. Do you have any concept of how wealth is moved! Hit the road ipod.

Mon, 03/21/2011 - 10:02 | 1081507 Seasmoke
Seasmoke's picture

sounds like the Fed has some problems

Mon, 03/21/2011 - 10:06 | 1081515 Caviar Emptor
Caviar Emptor's picture

Existing Homes data: a perfect hat trick of bad news: a miss on sales, declining prices in all regions, rising inventory. Prices fall 5% annualized. 

Chicago Fed National: A miss at -0.04

Mon, 03/21/2011 - 10:08 | 1081522 MrBoompi
MrBoompi's picture

The American "markets" open, stocks surge and the price of silver starts its downward slide. Rediculous. We need updated graphs showing the price action of silver when the American market is open and when it's closed. Manipulating bastards.

Mon, 03/21/2011 - 10:07 | 1081524 MrMorden
MrMorden's picture

So...we buy up all the toxic debt MBS from the banks to save the financial system, then sell them back to the banks to save the Fed?  I'm assuming in two more years when the MBS crash the banks again, the Fed will buy them back again for pennies on the dollar, and we can lather/rinse/repeat this cycle until the debts are essentially gone and the investors/taxpayers fully screwed? 

Mon, 03/21/2011 - 11:22 | 1081844 defn8Dog
defn8Dog's picture

If the toxic stuff begins to get real marks, OTTI will become a household acronym. More likely:  banks collude on pricinig and make it up under clusterswap arrangements with each other.  subspicies of the genus clusterflock.

Mon, 03/21/2011 - 10:09 | 1081528 stormsailor
stormsailor's picture

/es up 20 points on nada.  

 

no correlation with reality

Mon, 03/21/2011 - 10:21 | 1081595 Boilermaker
Boilermaker's picture

Why does it need to be real?  Aren't we way way past that point?

Mon, 03/21/2011 - 10:41 | 1081675 Yen Cross
Yen Cross's picture

yes we are dealing with children. I stand corrected.

Mon, 03/21/2011 - 10:10 | 1081532 r101958
r101958's picture

Yes, bump already fading.

Mon, 03/21/2011 - 10:22 | 1081613 Boilermaker
Boilermaker's picture

I can hear the slide on the shotgun pump grip going backwards.

Mon, 03/21/2011 - 10:11 | 1081538 b_thunder
b_thunder's picture

Summer 2007 all over again:  dividends, buybacks, buyng crappy assets with 40:1 leverage.

 

Mon, 03/21/2011 - 10:13 | 1081541 virgilcaine
virgilcaine's picture

Textbook short entry here with a stop at Feb Highs!  A gift .. ride the back of the Swan like a baby.

 

A perfect trade from the technical side..entry on confirmed downtrend with stop

Mon, 03/21/2011 - 10:10 | 1081547 RobotTrader
RobotTrader's picture

This is the ideal spot to lay out some shorts.

If we close higher by the bell, then the market is a lot stronger than I thought.

Mon, 03/21/2011 - 10:18 | 1081579 Cognitive Dissonance
Cognitive Dissonance's picture

OMG.

RobotTrader says go short? Where are those pictures of crocodiles and wildebeest Robo?

Mon, 03/21/2011 - 10:31 | 1081637 stormsailor
stormsailor's picture

you go on ahead robo,  i'll watch to see what happens.

 

my point is they can blow it up 20 anytime they want.  and wreck your account.

 

the very premise that its right at the dma is a wonderful place for them to shear you like a sheep.

Mon, 03/21/2011 - 10:32 | 1081649 Boilermaker
Boilermaker's picture

Here you go...free of charge...

my point is they WILL blow it up 20 anytime they want.  and wreck your account.

Mon, 03/21/2011 - 10:32 | 1081643 Caviar Emptor
Caviar Emptor's picture

Hehe don't be ridiculous, Robo. There is no market. 

Mon, 03/21/2011 - 10:33 | 1081654 Boilermaker
Boilermaker's picture

+1,300

To try to continue to apply market analysis to something that isn't a market is...beyond stupid.

Mon, 03/21/2011 - 10:37 | 1081667 plocequ1
plocequ1's picture

I say this every fucking day. This reply should be highlighted every day

Mon, 03/21/2011 - 10:40 | 1081680 Caviar Emptor
Caviar Emptor's picture

Only way to stay sane and profitable

Mon, 03/21/2011 - 10:14 | 1081558 Seasmoke
Seasmoke's picture

this sounds like a classic KITING scam.......back and forth back and forth

Mon, 03/21/2011 - 10:24 | 1081615 Boilermaker
Boilermaker's picture

To be fair, it's more of a daisy chain.  Kiting sounds worse...let's use daisy chain.  It has a flower in it, which is nice.

Mon, 03/21/2011 - 10:13 | 1081561 virgilcaine
virgilcaine's picture

Yes Robo Yes!

Mon, 03/21/2011 - 10:14 | 1081564 r101958
r101958's picture

Existing homes data and all else missing from Google finance page. Big headline is ATT buying T-Mobile. What a farce.

 

http://www.google.com/finance?tab=we

Mon, 03/21/2011 - 10:16 | 1081568 bob_dabolina
bob_dabolina's picture

Looks like 55dma is the area to watch.

Mon, 03/21/2011 - 10:15 | 1081571 Yen Cross
Yen Cross's picture

Cool i"m looking at some serious work! Sorry for the double appostrophe. (sp)

Mon, 03/21/2011 - 10:23 | 1081604 Yen Cross
Yen Cross's picture

I hate this flight. I usually hit Aukland first. 4 more hours.

Mon, 03/21/2011 - 10:22 | 1081607 EB
EB's picture

FRBNY kicks off its Lieberty Street Economics blog today, six short months after signing up with TypePad:

http://libertystreeteconomics.newyorkfed.org/

Up next:

Everything You Wanted to Know About the Tri-Party Repo Market, But Didn't Know to Ask

Mon, 03/21/2011 - 10:37 | 1081651 DaveyJones
DaveyJones's picture

where are all the creative avatars and sarcastic comments?

More Upcoming Posts: Why Two Negatives Make a Positive

Mon, 03/21/2011 - 10:52 | 1081739 disabledvet
disabledvet's picture

two?  more like "Apocalypse Now--BOTFD!"

Mon, 03/21/2011 - 10:23 | 1081608 Yen Cross
Yen Cross's picture

I hate this flight. I usually hit Aukland first. 4 more hours.

Mon, 03/21/2011 - 10:24 | 1081617 Iam_Silverman
Iam_Silverman's picture

"As usual the only loser here is the taxpayer, as banks will very soon have dangerously low cash and capitalization levels,"

Do you reckon this may impair their ability to pay dividends, buy back shares - and most importantly, increase banker bonus pools?

Mon, 03/21/2011 - 10:27 | 1081629 vote_libertaria...
vote_libertarian_party's picture

So the deal is the banks had MBS that were worth 20 cents of par.  The Treasury buys them at par (they never gave the full details) now they are selling them back to the banks at 10 cents of par.

 

 

Mon, 03/21/2011 - 10:30 | 1081640 Yen Cross
Yen Cross's picture

negative par plus .025 bitch.

Mon, 03/21/2011 - 10:38 | 1081673 Iam_Silverman
Iam_Silverman's picture

You can say that again!

Mon, 03/21/2011 - 10:30 | 1081641 Yen Cross
Yen Cross's picture

negative par plus .025 bitch.

Mon, 03/21/2011 - 10:37 | 1081670 Iam_Silverman
Iam_Silverman's picture

Oh, you did.

Mon, 03/21/2011 - 10:30 | 1081635 bigredmachine
bigredmachine's picture

guess none of you own homes

Mon, 03/21/2011 - 10:37 | 1081658 Caviar Emptor
Caviar Emptor's picture

I empathize. The market is "celebrating" catastrophic news for homeowners. The comment from the NAHB was the recovery is choppy at best," if this is a recovery". !

Shocking for anybody in a high visibility position to say. 

This is not an economy that will reward anything real. Only paper. 

Mon, 03/21/2011 - 10:45 | 1081692 Iam_Silverman
Iam_Silverman's picture

"guess none of you own homes"

Please elaborate on your definition of "own".  Do I own a home?  Yes.  Do I have a mortgage?  No.  That is my definition of "owning" a home.

Once you "own" your home, you tend not to be so concerned about being underwater or not.  I don't treat any of my properties as an investment (or ATM with cash-out refi).  They are a necessity, like food and water.  Gotta have shelter.

Mon, 03/21/2011 - 12:11 | 1081989 davepowers
davepowers's picture

given the level of property taxes, none of us own our own homes

Mon, 03/21/2011 - 12:13 | 1081996 Boilermaker
Boilermaker's picture

Sure, you own the home.  You just never own the dirt under it.

Mon, 03/21/2011 - 10:34 | 1081660 mr. mirbach
mr. mirbach's picture

Treasurreal FEDserve 

I'm increasing my holdings in lead and lead delivery systems!

Mon, 03/21/2011 - 10:37 | 1081669 Caviar Emptor
Caviar Emptor's picture

Time for some heavy metal 

Mon, 03/21/2011 - 10:38 | 1081671 curbyourrisk
curbyourrisk's picture

Fed bailout the banks.......

Treasury bailout the FED.......

taxpayers bailout the Treasury.......default imminent.

 

This circle jerk must stop.......at any cost....

Mon, 03/21/2011 - 10:40 | 1081683 hubbywan
hubbywan's picture

When everyone knows that the market is rigged, is anyone fooled that the new oil slick in the gulf is not making any news. Is it possible that it is NOT time for oil to spike higher?

Mon, 03/21/2011 - 11:22 | 1081842 Boilermaker
Boilermaker's picture

There really is no point in applying any logic or even trying to.  It's nothing more than a script at this point.

Look at IYR, clearly, there's a 'goal' today as every sell is met with another stronger buy.  $59 is in the books.  Tomorrow it's $60.

The 'person' buying is confidential.  So, all I can to get pissed off.  The equities market is truly the perfect scam.  You're either in on it or your fucked or, at best, simply fucking gambling.

 

Mon, 03/21/2011 - 10:41 | 1081684 Misean
Misean's picture

This is Instagdeflationary right?

Mon, 03/21/2011 - 11:22 | 1081845 Boilermaker
Boilermaker's picture

Not when you simply print even more to overcome it.

Mon, 03/21/2011 - 10:47 | 1081705 Bansters-in-my-...
Bansters-in-my- feces's picture

When you have Shit for brains,FRN's seem to be appropriate for cleaning up the mess.

Mon, 03/21/2011 - 11:58 | 1081962 medicalstudent
medicalstudent's picture

treserve...

 

two heads are beter than one unless it manages public monies or is a japanese fish.

 

libya cant possibly last long, wtf are we doing? are the wheels coming off the bus in these hours.

 

japan is leveled with concurrent radiation emanation and we have time, money, and people to go fight for libyan whothefuckknowswhat? this is really the official story?

 

witness the degeneration of the highest life form ravaging what remains of itself to patheticlly accumulate resources enabling itself to ravage more of itself.

 

do we know no negative feedback?

 

first, as we have evolved and are here, assure yourself that mans intellect exceeds (and warrants) his agression. but it will not be pretty.

 

Mon, 03/21/2011 - 12:09 | 1081985 davepowers
davepowers's picture

ddon't know if it related to the Treasury MBS sell off, but last week's FED balance sheet had an interesting turn. Bank reserves fell by $44bn (after growing $300 bn in the prior 5 weeks). The Treasury's checking account at the FED increased by a corresponding amount (plus $25 bn more as the FED paid off more of the SFP).

So, are bank reserves now going to be transferred to the Treasury on a sustained basis. Put into the Treasury's checking account, the Treasury could then write plenty more checks to cover the cost of govt. operations.

Of course, the FED would have to have the wherewithal to cover those checks. Which they have done recently by borrowing money from the banks in the form of a data punch entry increasing the amount of bank reserves.

No wonder Bernanke says he's so 100% confident - he's discovered a perpetual motion machine.

We should just be happy we live in the land of the Free Lunch.

Mon, 03/21/2011 - 12:20 | 1082015 rufusbird
rufusbird's picture

"The sales could generate a profit for taxpayers of about $15-$20 billion as market conditions have improved"

Another motive for them to keep the interest rates low...

Mon, 03/21/2011 - 12:31 | 1082044 Milton Waddams
Milton Waddams's picture

Treasury sounds much like my degenerate gambling uncle who always bragged about his casino wins but dare not speak of his losses. Of course when added up the losses outpaced the wins by a large margin and the poor fellow went completely bust.

Treasury sold its final share of Citigroup common stock, locking in a profit of more than $12 billion on that TARP investment. General Motors’ (GM) recent initial public offering cut Treasury’s common stock stake in that company nearly in half and brought in a total of $13.5 billion for taxpayers. Additionally, Treasury recently received $9.6 billion in TARP repayments through the sale of its Ally Financial trust preferred securities holdings and AIG’s sale of its MetLife equity stake.

Perhaps a never ending series of financial crises is the new growth industry?

Mon, 03/21/2011 - 12:34 | 1082056 Boilermaker
Boilermaker's picture

No offense, but you damn well know that 99% of the populace won't go past the headline.  They'll take it for gospel and move on.

Mon, 03/21/2011 - 13:35 | 1082326 docj
docj's picture

Yep, the US Treas is locking-in profits like crazy - and yet, the current account deficit continues to climb.

Methinks they're lying like a old, cheap, worn-out rug.

Mon, 03/21/2011 - 13:43 | 1082355 Zero Govt
Zero Govt's picture

"...we can't wait for Directive #1 which will make selling any share an act of treason.."

No kidding??? . . . . these sick delusional human toilets (politicians) will rape/drag everything and everyone down the toilet with them to save their own snake skins right up to the last minute


Mon, 03/21/2011 - 22:33 | 1084536 TwoShortPlanks
TwoShortPlanks's picture

Title SHOULD read: Here's some Life Boats, now, let's Scuttle this fucking Ship.

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