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"Other Assets" Of $210 Billion Is Now The Fed's Third Largest Asset
Below is a list of the 4 largest Federal Reserve asset category by notional as of today:
- Treasurys: $1,655,889 million
- Mortgages: $883,627 million
- Other assets: $209,863 million
- Agency debt: $79,283 million
Quietly, the Fed's Other Assets have overtaken Agencies, and are now the Fed's third largest asset category and about four times the total Fed capital of $55 billion. We have written about these "other assets" in the past; we will likely write about them in the future again, for the simple reason that the chart showing the Fed's notional holdings in this category correlates quite clearly with the parabolic Greek unemployment rate.
Finally, here is the semi-circular definition of Other Assets provided by the H.4.1:
Includes other assets denominated in foreign currencies, which are revalued daily at market exchange rates, and the fair value adjustment to credit extended by the FRBNY to eligible borrowers through the Term Asset-Backed Securities Loan Facility.
Who knew that in addition to being a master of borderline Congressional perjury, the Fed was so adept at tautology: other assets are, well, other assets.
But at least we know something about the subset of the set that contains the set as a subset of itself (Bertrand Russell's head just exploded): it contains "other assets denominated in foreign currencies."
Foreign currencies: this means foreign assets. Which perhaps answers a long-running question. Recall that in March we revealed that, based on the Fed's own admission, it was monetizing not only US debt, but foreign debt as well (much like what the BOJ is hoping to do as well in its imminent "forceful" easing).
- *DUDLEY: FED HOLDS OVERSEAS SOVEREIGN DEBT TO MANAGE RESERVES
Wait, wait, it's in the Fed's charter to buy foreign bonds?
Yup. In the Chairman's own words:
Central banks typically hold a variety of assets, and the composition of assets on the cen- tral bank's balance sheet offers another potential lever for monetary policy. For example, the Federal Reserve participates in all segments of the Treasury market, with most of its current asset holdings of about $650 billion distributed among Treasury securities with ma- turities ranging from four weeks to 30 years. As an important participant in the Treasury market, the Federal Reserve might be able to influence term premiums, and thus overall yields, by shifting the composition of its holdings, say, from shorter- to longer-dated securities. In simple terms, if the liquidity or risk characteristics of securities differ, so that investors do not treat all securities as perfect substitutes, then changes in relative demands by a large purchaser have the potential to alter relative security prices. The same logic might lead the central bank to consider purchasing assets other than government securities, such as corporate bonds or stocks or foreign government bonds. (The Federal Reserve is currently authorized to purchase some foreign government bonds but not most private-sector assets, such as corporate bonds or stocks.)
One thing, however, that was unclear is where on its balance sheet the Fed was lumping these "overseas sovereign debt" purchases.
Now we know. And more importantly we know the maximum possible size (until such time as the Fed provides an actual break down of precisely what is in "other assets") of said foreign bond holdings: $209 billion and rising parabolically.
Perhaps, with Europe supposedly "stable" due to the recent stability of its sovereign bond markets, it is time to ask the Chairman just how responsible the Fed has been in the past several months for said stability, courtesy of expanding its own balance sheet, since the ECB continues to play coy with the Spanish PM, but where the completely unused OMT is supposed to provide some mystical backstop to everything.
Or, to cut to the chase, how many tens of billions of Spanish, Italian, French, Japanese and other sovereign bonds does the Fed currently hold?
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Black Holes.
DO OTHER ASSETS INCLUDE THE GLD?
Try SnP contracts
Millions?
I think we are off a half dozen zeros....
Not sure what you mean that we are off six zeros. The first number is 1.6 million million. One million million = 1 trillion. To accumulate one trillion dollars, you have to take one million millionaires, hire a few of them at Treasury, buy the President and Congress, and then steal the rest from the hundred million or so middle class. Voila.
"$209 billion and rising parabolically"
That plot does not look parabolic. I'd call it linear. Mischaracterizations like that throw water on otherwise great analysis.
Take it back a few decades and it's parabolic.
haha, yeah, i wonder what that r^2 looks like. sure as shit ain't anything close to 1.000
ok....instead of parabolic say the assets held went up 500% in a few years....notice the trend line?
•Treasurys: $1,655,889,000,000
•Mortgages: $883,627,000,000
•Other assets: $209,863,000,000
•Agency debt: $79,283,000,000
buy your ounces people. this creature is the bubble of all bubbles.
Bubble? I see no bubble...
[\SARC]
DavidC
scratch that ......try hookers and blow instead
swap lines, NO gold, S&P contracts, gold futures, puts, PIIGGY debt, miscellaneous unrated bad ass nte vaule zero horseshit
what have I missed?
The fed is a bubble.
I think that is called a Fubble
Nah, Fed and BOE allowing us to do the heavy-lifting/GLD buying for them. They get the benefit of swapping the gold out of the physical custodian stores though.
This is how the Fed and BOE are getting the physical gold back.
For anyone who hasn't seen this.
This is actually an excellent song, no joke.
Fuck The Fed - A Central Bank Love SongCharter, Constitution, whatever.
What constitutes Fed capital?
How did this fuck Bernanke get this kind of power?
Power is seized, not grannted.
Sun Tzu, I believe
Obama returned it to him after Bush...
DavidC
Lots and lots of imaginary electronic zeros, an old cigar box of razor stubble, 5 of Alexander Hamilton's toenail clippings, a small sack of Hitler's ashes, an autographed Linotype picture of Izaak Elchanan Rothschild and a cardboard box of tags illegally removed form pillows and seat cushions.
Booyah motherfuckers
Bridges, swampland and baseball and pokemon cards. Hundreds each of Micky Mantle and Babe Ruth that are worth 10s of billions of dollars each to the right buyer.
"What constitutes Fed capital?"
A nod or a wink to a blind horse.
If this is the case, then the Fed would have to be the most leveraged bank on earth. Total liabilities a couple of trillion, total assets a nod or a wink.
So why accept its credit as if it were the ultimate extinguisher of debt? As if it were money?
"My fellow Americans, I'm pleased to tell you today that I've signed legislation that will outlaw Russia forever. We begin bombing in five minutes." Ronald Reagan-August 11 1984
The Bernank can do it too. Ask Saddam and Mommar that wanted to try something different.
Go back and read the Guggenhiem report Tyler posted herein a few months ago. The Fed IS far and away the most leveraged financial organization on the planet.
Interest rates are not going to rise for at least 8 years, likely much longer.
If the Fed accomplishes their goal of $4 trillion in monetization, the Fed balance sheet will be levered close to 100:1, and the average duration of securities on that balance sheet will be more than 10 years. At that point, quite literally a shift of a few basis points in interest rates would render the Fed insolvent from one moment to the next.
Have a nice day!
And I'm guessing the Fed has its exit plan worked out.
[\SARC]
DavidC
DUDE: Huh? Oh. Yeah. Tape deck. Couple of Creedence tapes. And there was a, uh. . . my briefcase.
Cop: In the briefcase?
DUDE: Papers. Just papers. You know, my papers. Business papers.
I don't know why. That just seemed relevant.
Other assets like, um politicians?
When I was young and illiterate, I thought that "assets" were young, female donkeys....
There's gold in there somewhere.
Honestly, I think they'll eventually declare bankruptcy.
Then they'll start over with a new fiat game. Different front companies/names, a worse structure, but a return to shearing the same stupid sheep.
the classic new american sham
Of course, there were two before the Fed. Where's Andrew Jackson when you need him?
$209863 million?
A fucking lot!
ECU china and USA each pointing guns at each others head while masterbaiting each other
Is parabolic your favorite word? There are some great synonyms for it out there, just a thought.
Such as?
WOW!
Holy Shit!
Oh My God!
You gotta be kidding me!
Indicative is right:
But thanks for your negative contribution anyway. [Kudos, Knuckles. Don't forget "Holy Bejeebus", and "Fookin' 'Ell.]Other Assets = whatever other crap C, GS, JPM, MS and BAC used as collateral to stay above water.
No doubt taken off the hands of foreign subsidiaries of us banks, some well connected hedgies and of course duetche bank all at par. Bank bailouts forever. But of course many of the people that work at these institutions consider themselves hard working free market pure capitalists who deserve every dollar they "earn"
They are collecting all sorts of worthless bonds for the great vaporization.
They started with about half a trillion before the great farce. I'm thinking they're goint to push away from the table before it hits ten trillion, maybe before 5 trillion. Someone might accuse them of cheating if the pot gets too high.
Which category records the Short VIX Futures?
Economy or no economy, people still gotta hang a rat. Gotta get some t.p. somewhere.
Does it matter? They don't ever have to mark them to market right?
A small part of me could see those other assets being Maple leafs, kruggerands and credit suisse bars. Then, when on the border of hyperinflation Bernak comes out with a pile of bullion and grabs his balls and yells "How you like me now!!!" That would be something.
I really am Laughing Out Loud! You made my evening
they're buying FRE FNM FHA paper at face value-in a round about way (it was collateral) , a housing crater is coming, America is going to eat that bad paper and pay Mexicans to breed in them foreclosures.
O wait we already did that, O this is that low life EU subprime paper too, for all the people that coudn't get an Ameriquest loan.
It's a simple 3 step process at this point:
1) Audit the Fed
2) Arrest all involved for crimes against the United States
3) Convict and carry out the punishment for High Treason.
Hah ha ha ha
So simple a cave man could do it.
Good luck
So that means a cave man would be more advanced than our modern-day Average Amerikkkan.
Sounds about right to me.
Let's get ready for some football, bitchez!
http://www.post-gazette.com/stories/sports/steelers/tomlin-names-roethli...
And, well, not for hockey.
http://www.post-gazette.com/stories/sports/penguins/nhl-lockout-negotiat...
Happy Fucking Holidays!
Ron Paul is changing in the phone booth at this moment.
It is revolting that the NY Fed has an infinity FX swap line with the ECB. Y'know Obama you f*cking ignorant fool, on your watch you have an unelected rogue governing body i,e the Fed - funding every crony capo on the planet. Nice work, guillotine worthy, for real.
you are being a bit harsh chump it is clearly all explained right here.
http://www.youtube.com/watch?v=n0NYBTkE1yQ
Bernanke not listing the CB banks!!! FX wires once a month the NY Fed lists its dealings with the ECB, usually about 200-500million a month. Infinity. As if the ECB (and Euro banks) with the crappiest collateral you could have want can then pay the Fed back!
Could be one of the reasons that the FX markets have had volatility almost completely wipe-out. In that sense, yes, FX now is completely a central planned fixed price market, bought and sold via CB's. Whether they could pull this off 100% in the stock market...
Fucking Bawney Fwank's ass was puckering with that line if questioning. He couldn't cut him off quick enough.
I've said it before: the evil trio of Gaithner, Barnank and diamon are running the show! The prez and most other politicians are simply accessory to fraud and corruption for funding and political gains!
Time to take 'm down.
Buy physical gold and silver!
Just like with HFT/algos, this story will appear on BBG in another year or two.
2010 shall be remembered as The Year of the Great Restraint.
Propping up the Stock.
One word: Stocks.
Duh. Winning! (Or, are we past that phrase now?)
bi-winning?
Thank God December 21st is almost here. I can't believe the Mayans saw this coming. No wonder they sacrificed their bankers. Their God was happy, but not now.
Is it their mandate to save sovereigns in Europe and at the same time pass on the responsibility to the American tax payer? Nope. End the Fed and jail these criminals.
So we got at least two Fed assholes hangin on my every word.
Good.
Let me splain myself. You are a merely a conveyance of lawfully produced property to others in the political/oligarch classes who did not earn it.
Nothing more, nothing less...a tool.
Keep an eye on Maiden Lane, bitchez. Perhaps more than MBS there.
doesnt their 99-year rule of theft lease , come to a close in 2013......BYE BYE !
No. There is no end date in the fed charter. They are around to plunder and steal as long as congress wants them around , since it takes an act of congress to dissolve the fed.
The nice thing is that when the times comes, they will all go to hell together.
it truly is amazing what you can do when you print your own money. fed buys foreign bonds, keeping rates in italy spain france acceptable....fx fluctuation? no worries, just do some fx swaps and drive that euro back up...and it goes in circles and circles....
but at some point as the numbers become not just surprisingly large, but fantastic and cease to be real or have an impact on markets. but of course the fed is allowed to buy anything it wants. it could litereally monetize every asset under the sun...which may be the plan..it owns everything, and we have fiat....but more realistically-- what bizarro 'efforts' will a cornered fed do to keep the illusion alive?
it was eur/usd....now jpn/usd....central bank swap/repo maneuvres to keep things balanced.....but it used to be that supply and demand decided the price of assets/currency/bonds not a committee, but now we know better, yes comrade?
Pretty sure the "other" category has a few million shares of Apple after this morning.
Do "other assets" include California and Illinois State bonds and Detroit Municipal bonds?
If only. They're a shitload of scratch-off tickets from multiple state lotteries.
The ultimate hedge since you can hold on to them for book value until someone actually scratches them off to see if you're a winner.
"... correlates quite clearly with the parabolic Greek unemployment rate."
HOLY SHIT! Bernanke is hoarding unemployed Greeks*!?!
Fed capital = shit paper
We're toast!
spoos
That's ALOT of TUNGSTEN!.
Wait untill the "Other Assets" will be an entire foreign stock exchanges and soverign bonds ...
Don't forget about 50 billion in ES futures contracts
Tautology is what made Chauncy Gardener appear to be so smart. Hey it worked for him why not for the Bernank.
This is a bit silly. All central banks hold reserves in the form of sovereign debt securities in the dominant reserve currencies. A chart showing foreign central bank holdings of US Treasuries would probably show a similar - or even more marked - upward trajectory as US issuance of Treasuries has massively surged since 2007 with the explosion of the federal deficit.
Yes, the Fed holds euro- and yen-denominated government debt. Frankly, I'm relieved that their exposure to Agencies is falling as a proportion of their asset mix. Greece may be a cesspool of corruption, but is still better than Fannie and Freddie.
I really liked the comment about December,21=) But to be honest, I am so angry, this is such a shame for Americans to have people like we do have rulling our country.
This is just unacceptable. You know what, I like how they call it: Other assets. I am just out of words. Let me repeat myself: This is a big shame for Americans. We are only left to hope for the best now( bu what can we hope for with news like this one). Good luck to all of us, it was Melody from PaydayLoans @ online company.
this is a hint of essence of ben dollar devaluation if ben & his succesors can pull it off you zh pm lovers will win; but as time goes on it will get tougher to do
Seems so corrupt. Way too many zeros. You can run an entire clandestine foreign policy this way. Oh. Mr. China...you don't like our dollar policy? Not happy owning our treasuries? Do not make a fuss. Just create some bullshit bond at say, oh I don't know 40 percent intrest and we will buy the whole lot. Let me call my friend Benny.
They could easiily buy up some Portuguese debt and "fix" that economy pronto!
I know most reading here understand this but lets put it in black and white: the DHS, TSA, CIA, NSA, ...all are assets of the FED, without ben buying our debt they could not happen, oh ,add the odd war or two to the list..see no evil hear no evil..how do we value those assets?
Two thoughts:
They never think these things through completely, and they are now playing in securities with which they have NO EXPERIENCE!!!
God help us....
they trying to debunk you tylor
http://alea.tumblr.com/post/37396001099/zerohedge-debunked