@MsMorrisine said:
as stated earlier, counterparty risk is not it.
we would hear about counterparty risk in other markets, too. i.e. derivatives market and with CDS.
this is a lack of cash crisis and for those under the federal reserve umbrella a required reserve deficiency for those that had such.
funny how there's a lack of cash issue until one bank is willing to pay another bank 10% overnight interest for some of the cash.
Tells me some banks are much better positioned in cash than others. The ones with a shortage would certainly be viewed as a risk by those with the cash.
if you had a bunch of holdings for trades you would want an attractive rate to close out and loan overnight.
@MsMorrisine said:
as stated earlier, counterparty risk is not it.
we would hear about counterparty risk in other markets, too. i.e. derivatives market and with CDS.
this is a lack of cash crisis and for those under the federal reserve umbrella a required reserve deficiency for those that had such.
And speaking of counter party risk in the derivatives markets, a failing Deutsche Bank holds a $43T derivatives book that puts many major US financial institutions at great risk. I'm sure that is on the mind of those institutions when asked by DB for an overnight loan. LOL
say DB needs cash. DB is a primary dealer. They can go to the Fed, put up Treasuries as collateral and get the cash,
@MsMorrisine said:
as stated earlier, counterparty risk is not it.
we would hear about counterparty risk in other markets, too. i.e. derivatives market and with CDS.
this is a lack of cash crisis and for those under the federal reserve umbrella a required reserve deficiency for those that had such.
Would be interesting to know how much of this recent FED repo money is designed to keep DB afloat. We'll know soon enough. It's no secret that I have been forecasting DB's coming failure and the pending disaster it poses for all the US financial institutions caught up in it's massive derivative book. I'm now on the record that this whole FED repo fiasco is completely about prevent DB from taking the system down. Just how long it can be kept a secret remains to be seen.
these are not afloat operations. this is a manipulation of required reserves and cash available to the secondary repo market.
these are overnight loans and 14 days loans. they don't have any staying power to keep anything afloat.
@MsMorrisine said:
as stated earlier, counterparty risk is not it.
we would hear about counterparty risk in other markets, too. i.e. derivatives market and with CDS.
this is a lack of cash crisis and for those under the federal reserve umbrella a required reserve deficiency for those that had such.
funny how there's a lack of cash issue until one bank is willing to pay another bank 10% overnight interest for some of the cash.
Tells me some banks are much better positioned in cash than others. The ones with a shortage would certainly be viewed as a risk by those with the cash.
if you had a bunch of holdings for trades you would want an attractive rate to close out and loan overnight.
Sure, but why all of a sudden after ten years of these banks being satisfied with the fed funds rate set by the FED. All of a sudden they want much more.
@MsMorrisine said:
as stated earlier, counterparty risk is not it.
we would hear about counterparty risk in other markets, too. i.e. derivatives market and with CDS.
this is a lack of cash crisis and for those under the federal reserve umbrella a required reserve deficiency for those that had such.
Would be interesting to know how much of this recent FED repo money is designed to keep DB afloat. We'll know soon enough. It's no secret that I have been forecasting DB's coming failure and the pending disaster it poses for all the US financial institutions caught up in it's massive derivative book. I'm now on the record that this whole FED repo fiasco is completely about prevent DB from taking the system down. Just how long it can be kept a secret remains to be seen.
these are not afloat operations. this is a manipulation of required reserves and cash available to the secondary repo market.
these are overnight loans and 14 days loans. they don't have any staying power to keep anything afloat.
sure, understand. They get the bank through the night. But the FED has been having to jump in every day for over two weeks. Someone is in trouble.
Global bond markets came under pressure in the morning in the wake of an auction for Japanese government bonds. The sale saw its biggest “tail” for a 10-year note since 2015, a sign that the auction struggled to draw interest from market participants. The tail is the amount by which the highest yield the Treasury sold in the auction exceeds the highest yield expected when the auction began.
“We have plenty of liquidity,” said the chief financial officer of a top-10 US bank. “We are just choosing not to lend it out overnight to hedge funds.”
Deal Date: Wednesday, October 02, 2019
Delivery Date: Wednesday, October 02, 2019
Maturity Date: Thursday, October 03, 2019
Type of Operation: Repo
Auction Method: Multiple Price
Settlement: Same Day
Term of Operation - Calendar Days : 1 Day
Term of Operation - Business Days : 1 Day
Operation Close Time: 08:30 AM
Nonsense.....you can thank the FEDS for bailing them out with a $182 billion loan that was fully repaid by 2012 with a nice profit to the feds.
Double Secret Probation! You really believe that good old Hank Paulson wasn't running interference for Goldman Sachs with his TARP bailouts? Do you really think that AIG became so much more profitable after being bailed out and shrunk down in size such that it's shares rose to the extent that they could pay off their TARP loan at a profit? Really? Did AIG and Goldman become that much more profitable? How so? Gimme a break.
Reference what's been going on with the missing $21 trillion or more that was stashed in the DoD and HUD books that's now gone "dark" under FASAB 56 for national security "reasons", or do you think that's fake news too?
Q: Are You Printing Money? Bernanke: Not Literally
Reference what's been going on with the missing $21 trillion or more that was stashed in the DoD and HUD books that's now gone "dark" under FASAB 56 for national security "reasons", or do you think that's fake news too?
Yes. Analyzing faulty data will not produce a legitimate result.
@jmski52 said: AIG was not allowed to fail...& didn't
Right! Goldman Sachs wouldn't allow it.
Nonsense.....you can thank the FEDS for bailing them out with a $182 billion loan that was fully repaid by 2012 with a nice profit to the feds.
Didn't AIG owe a lot of money to Goldman Sachs at the time ?
If so, that would be a major incentive for Goldman Sachs to utilize their influence with the Federal Reserve to make sure AIG got bailed out.
@jmski52 said: AIG was not allowed to fail...& didn't
Right! Goldman Sachs wouldn't allow it.
Lehman was allowed to fail. . . & did.
I note that member banks (owners) of the Federal Reserve (such as Bank of America, Citi, Wells Fargo, JP Morgan Chase, etc) received bailout assistance in 2008 but other entities such as Lehman Brothers who were not in the "club" were let go.
Bear Stearns also failed in the crisis of 2008. Although they were not members/owners of the Fed, the Fed initially offered a bailout loan to Bear Stearns. But that initial loan offer was withdrawn. Later, a different loan was actually made - but only AFTER it had been arranged for Bear Stearns to be folded into JP Morgan Chase.
@jmski52 said: AIG was not allowed to fail...& didn't
Right! Goldman Sachs wouldn't allow it.
Lehman was allowed to fail. . . & did.
I note that member banks (owners) of the Federal Reserve (such as Bank of America, Citi, Wells Fargo, JP Morgan Chase, etc) received bailout assistance in 2008 but other entities such as Lehman Brothers who were not in the "club" were let go.
Bear Stearns also failed in the crisis of 2008. Although they were not members/owners of the Fed, the Fed initially offered a bailout loan to Bear Stearns. But that initial loan offer was withdrawn. Later, a different loan was actually made - but only AFTER it had been arranged for Bear Stearns to be folded into JP Morgan Chase.
AIG was saved by the wisdom and actions of one man: Bob Benmosche.
Before Benmosche was brought in, AIG was teetering on the brink due to extraordinary losses incurred on credit default swaps.
In fact, the core businesses were highly profitability before and after the crisis.
The Feds believed that the best approach to recovering the money infused was a break-up and sale of the company, piece by piece. Benmosche took a different approach: sell of some valuable non-core businesses, including much of the global life insurance business, and focus on the casualty business.
While one can debate whether Federal government intervention was warranted, the repayment with interest was based entirely on the real value associated with the entity (and was achieved because Benmosche appreciated that value)
the secndary repo market is a private one. it is outside the fed's control. however, as can be seen with the recentmost rate spike, it can influence the fed funds rate.
what to do about it is the problem. what can be done with a private market outside of the fed's influence.
Fed Chair: "I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis. Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy..."
Translation: Don't confuse balance sheet growth for "reserve management" with balance sheet growth for "stock market management
So, when the Fed is worried that the I and the public might realize that this new money pump scheme is the same as the old money pump scheme, then I find reason to worry.
"The Federal Reserve will announce today that it has decided against forcing U.S. branches of foreign banks to hold a minimum level of liquid assets to protect them from a cash crunch."
liquid assets include cash reserves. The continuing POMO "bailout" by the FED has been about cash reserves.
“We are not going to sell them,” said Pia McCusker, global head of cash management at State Street Global Advisors, which holds more than $22bn of T-bills in its $350bn of money market funds. “It’s a short-term gain and then I would have to replace it with something else at a much lower rate.”
@shortnock said:
What does all this mean in little words?
FED is spending an unplanned $75B a day (at least until Oct. 10) to keep the market from determining a higher interest rate on what banks borrow from each other in the very short term to maintain required cash reserves that are set by the FED. It means there is a liquidity crisis and the FED will have to make a choice between a lower requirement for bank cash reserves or some form of quantitative easing (QE). Cash reserves are one of the tools that protects the economy from bad banks. Lower that and you increase risk of bank failure.
The Fed ended balance sheet normalization recently.
had there never been qe, the balance sheet would be considerably smaller than what it is now.
also, the fed announced expanding the balance sheet again to acommodate economic growth. the rate of change to the size of the balance sheet as compared to pre-qe and before qe-lite is a considerably steeper rate of change.
this is definitely weird. I'd love to grill the fed on this.
"the Fed’s most recent actions have undone 5 months of ‘tightening’ in just five blistering weeks of panic:"
The fact that the FED cannot normalize (pre-2008 levels) it's balance sheet or near zero interest rates is proof that the great crisis that began in 2008 has not been fixed, only delayed.
Comments
Changing subjects now? You make a good politician.
you're the one who brought up AIG.
They were bailed out with QE, right?
Give Me Liberty or Give Me Debt
if you had a bunch of holdings for trades you would want an attractive rate to close out and loan overnight.
say DB needs cash. DB is a primary dealer. They can go to the Fed, put up Treasuries as collateral and get the cash,
these are not afloat operations. this is a manipulation of required reserves and cash available to the secondary repo market.
these are overnight loans and 14 days loans. they don't have any staying power to keep anything afloat.
today's repo was under subscribed
Sure, but why all of a sudden after ten years of these banks being satisfied with the fed funds rate set by the FED. All of a sudden they want much more.
Give Me Liberty or Give Me Debt
sure, understand. They get the bank through the night. But the FED has been having to jump in every day for over two weeks. Someone is in trouble.
Give Me Liberty or Give Me Debt
Australia’s central bank cuts interest rates to new all-time low
https://www.ft.com/content/79a3b602-e400-11e9-9743-db5a370481bc
Treasury yields sink after ISM manufacturing gauge stays in contraction territory
https://www.marketwatch.com/story/treasury-yields-surge-after-japan-bond-auction-sees-tepid-demand-2019-10-01
Global bond markets came under pressure in the morning in the wake of an auction for Japanese government bonds. The sale saw its biggest “tail” for a 10-year note since 2015, a sign that the auction struggled to draw interest from market participants. The tail is the amount by which the highest yield the Treasury sold in the auction exceeds the highest yield expected when the auction began.
https://www.reuters.com/article/us-usa-fed-repo/n-y-fed-awards-54-85-billion-in-overnight-repos-idUSKBN1WG3WM
NEW YORK (Reuters) - The New York Federal Reserve on Tuesday awarded $54.85 billion to primary dealers at an operation of overnight repurchase agreements in an effort to maintain the federal funds rate within its target range of 1.75%-2.00%.
Tuesday’s amount was smaller than the $63.5 billion in overnight repos the regional central bank awarded on Monday, the New York Fed website showed.
The general collateral repo rate USONRP= was bid at 1.98% at 8:47 a.m. EST, unchanged from prior to the operation.
Too big to lend? JPMorgan's cash tweaks take toll on U.S. repo
https://www.reuters.com/article/us-usa-repo-jpmorgan-analysis/too-big-to-lend-jpmorgans-cash-tweaks-take-toll-on-us-repo-idUSKBN1WG439
"You Can't Make Them Lend"
Fed wrestles with role of regulation in repo squeeze
Breakdown in overnight lending exacerbated by banks’ preference for reserves
https://www.ft.com/content/45a9c196-e231-11e9-9743-db5a370481bc
Turns out JPM was behind the repo shock
Give Me Liberty or Give Me Debt
you trust ZH so much that you'd post a link to them despite one of ZH's links has already been posted here????????
trust ZH trusting reuters to make it trustable?
{and note the extreme similarities between ZH and reuters}
anyway I thought you went on record that it was a DB bailout.
ZH missed this one:
“We have plenty of liquidity,” said the chief financial officer of a top-10 US bank. “We are just choosing not to lend it out overnight to hedge funds.”
here it is using a google link:
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=2ahUKEwiHranGz_7kAhUPXsAKHb5_BXMQFjACegQICxAH&url=https://www.ft.com/content/45a9c196-e231-11e9-9743-db5a370481bc&usg=AOvVaw0SUe_uQsip6hayX5vLw5tF
The "news" is saying that I was wrong. LOL.
Give Me Liberty or Give Me Debt
https://apps.newyorkfed.org/markets/autorates/tomo-results-display?SHOWMORE=TRUE&startDate=01/01/2000&enddate=01/01/2000
Deal Date: Wednesday, October 02, 2019
Delivery Date: Wednesday, October 02, 2019
Maturity Date: Thursday, October 03, 2019
Type of Operation: Repo
Auction Method: Multiple Price
Settlement: Same Day
Term of Operation - Calendar Days : 1 Day
Term of Operation - Business Days : 1 Day
Operation Close Time: 08:30 AM
Results Amount ($B) Rate (%)
Total 42.050
https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details
$42 out of $75
AIG was not allowed to fail...& didn't
Right! Goldman Sachs wouldn't allow it.
I knew it would happen.
today's repo $33.55B / $75B
Lehman was allowed to fail. . . & did.
Give Me Liberty or Give Me Debt
Nonsense.....you can thank the FEDS for bailing them out with a $182 billion loan that was fully repaid by 2012 with a nice profit to the feds.
Still no panic that I can see, fake newz from zero hedge and gold at $1506. Wake me up when the panic really starts.
The whole worlds off its rocker, buy Gold™.
Heavens forbid...fake news or fabricated news from ZH.....what's this world coming to.
read this first:
https://www.reuters.com/article/us-usa-repo-jpmorgan-analysis/too-big-to-lend-jpmorgans-cash-tweaks-take-toll-on-us-repo-idUSKBN1WG439
then read this:
https://www.zerohedge.com/markets/here-megabank-behind-septembers-repo-shock
Agree...."and note the extreme similarities between ZH and reuters"
Nonsense.....you can thank the FEDS for bailing them out with a $182 billion loan that was fully repaid by 2012 with a nice profit to the feds.
Double Secret Probation! You really believe that good old Hank Paulson wasn't running interference for Goldman Sachs with his TARP bailouts? Do you really think that AIG became so much more profitable after being bailed out and shrunk down in size such that it's shares rose to the extent that they could pay off their TARP loan at a profit? Really? Did AIG and Goldman become that much more profitable? How so? Gimme a break.
Reference what's been going on with the missing $21 trillion or more that was stashed in the DoD and HUD books that's now gone "dark" under FASAB 56 for national security "reasons", or do you think that's fake news too?
I knew it would happen.
Yes. Analyzing faulty data will not produce a legitimate result.
Knowledge is the enemy of fear
1+1=11
Faulty data from gov.com? Shirley, you jest.
I knew it would happen.
Didn't AIG owe a lot of money to Goldman Sachs at the time ?
If so, that would be a major incentive for Goldman Sachs to utilize their influence with the Federal Reserve to make sure AIG got bailed out.
I note that member banks (owners) of the Federal Reserve (such as Bank of America, Citi, Wells Fargo, JP Morgan Chase, etc) received bailout assistance in 2008 but other entities such as Lehman Brothers who were not in the "club" were let go.
Bear Stearns also failed in the crisis of 2008. Although they were not members/owners of the Fed, the Fed initially offered a bailout loan to Bear Stearns. But that initial loan offer was withdrawn. Later, a different loan was actually made - but only AFTER it had been arranged for Bear Stearns to be folded into JP Morgan Chase.
proof that they will eat their own.
Give Me Liberty or Give Me Debt
AIG was saved by the wisdom and actions of one man: Bob Benmosche.
Before Benmosche was brought in, AIG was teetering on the brink due to extraordinary losses incurred on credit default swaps.
In fact, the core businesses were highly profitability before and after the crisis.
The Feds believed that the best approach to recovering the money infused was a break-up and sale of the company, piece by piece. Benmosche took a different approach: sell of some valuable non-core businesses, including much of the global life insurance business, and focus on the casualty business.
While one can debate whether Federal government intervention was warranted, the repayment with interest was based entirely on the real value associated with the entity (and was achieved because Benmosche appreciated that value)
the secndary repo market is a private one. it is outside the fed's control. however, as can be seen with the recentmost rate spike, it can influence the fed funds rate.
what to do about it is the problem. what can be done with a private market outside of the fed's influence.
today's repo was about $47/75
Fed Announces QE4 (But Don't Call It QE4)
Fed Chair: "I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis. Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy..."
Translation: Don't confuse balance sheet growth for "reserve management" with balance sheet growth for "stock market management
So, when the Fed is worried that the I and the public might realize that this new money pump scheme is the same as the old money pump scheme, then I find reason to worry.
Give Me Liberty or Give Me Debt
Q E 6!
last day of repos
first day of qe lite?
the repos continue
handle not made
You would figure all this QE and Fed panicking would be a positive for metal prices. Guess not :roll
The whole worlds off its rocker, buy Gold™.
once reality sinks in . . .
Give Me Liberty or Give Me Debt
I used to agree but seems I've been saying that for more than a few decades now. Guess its off to ebay looking for another deal or two. Stack on!
The whole worlds off its rocker, buy Gold™.
Another Deutsche Bank bailout clue
"The Federal Reserve will announce today that it has decided against forcing U.S. branches of foreign banks to hold a minimum level of liquid assets to protect them from a cash crunch."
liquid assets include cash reserves. The continuing POMO "bailout" by the FED has been about cash reserves.
Give Me Liberty or Give Me Debt
QE4ever officially begins
Give Me Liberty or Give Me Debt
ZH rips off another news service, this time the FT
“We are not going to sell them,” said Pia McCusker, global head of cash management at State Street Global Advisors, which holds more than $22bn of T-bills in its $350bn of money market funds. “It’s a short-term gain and then I would have to replace it with something else at a much lower rate.”
we'll see how this plays out.
right now, t-blls are yielding under 1.7%. there is the opportunity to make more lending the cash out in to repo market.
Thread moving along, informative and entertaining like classical music....THEN a certain fingernails on the chalkboard bully walks in.
Honestly, I’m grateful since I just discovered the ‘Ignore’ feature.
The FED chooses both
Give Me Liberty or Give Me Debt
Official Fed Balance Sheet Now Up Over $200 Billion Dollars In 6 Weeks!
But it's not QE.
Give Me Liberty or Give Me Debt
The Fed ended balance sheet normalization recently.
had there never been qe, the balance sheet would be considerably smaller than what it is now.
also, the fed announced expanding the balance sheet again to acommodate economic growth. the rate of change to the size of the balance sheet as compared to pre-qe and before qe-lite is a considerably steeper rate of change.
this is definitely weird. I'd love to grill the fed on this.
"When it becomes serious, you have to lie"
"the Fed’s most recent actions have undone 5 months of ‘tightening’ in just five blistering weeks of panic:"
The fact that the FED cannot normalize (pre-2008 levels) it's balance sheet or near zero interest rates is proof that the great crisis that began in 2008 has not been fixed, only delayed.
Give Me Liberty or Give Me Debt
Rates can be pushed into the negative only so far, and now we know the limit.
Knowledge is the enemy of fear