Without a doubt, the graphs above are telling us that something “broke” in the banking system which necessitated the biggest injection of Treasury collateral in history into the global banking system by the Fed.IRD
A Liquidity Crisis Hit The Banking System In September
ht The Automatic Earth
Also from The Automatic Earth
Bank Of England Warns Financial Institutions Over Commodities Exposure (Guardian)
Also
Glencore slashes zinc production and jobs
Also from The Automatic Earth
Bank Of England Warns Financial Institutions Over Commodities Exposure (Guardian)
Also
Glencore slashes zinc production and jobs
Former IMF chief economist backs 'people's QE'
6 comments:
Probably somebody needed a positive yield when the rates were plummeting last month....
UST curve is at/below 0.25% policy rate out to 1 year currently...
here:
http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
You have all of these institutions trying to make interest income to survive and clamoring for USTs ... Fed, IMF, World Bank, ECB/NCBs, member banks... so USTs are at zero.... so the repo market perhaps can be arranged so it has a positive yield...
The Fed owns a huge chunk of supply. The whole situation is ludicrous. We go around saying how much debt we have and nobody can get their hands on any. Completely insane.
Mike imo if the Fed doesnt raise soon, some of these institutions may be in trouble....
I have to think about this reverse repo thing here... maybe its a way for the Fed to maintain a positive yield when a lot of their short term stuff they are rolling over is at zero or less with the spreads....
Or maybe they will start to charge a fee for deposits or something... they seem firm on paying the 0.25% for now though....
They do have their MBS though which is probably really yielding nicely for them and covers most of their needs...
No telling what these deranged people will do beyond self-interest/survival instinct....
I'd like to see them "run out of money!" and have to go to the GOP crazies for an appropriation! LOL!
I dont think the economy would even miss a beat as long as the $300B+ per month was still going out and the payment system was running....
btw the EX/IM bank is having a tough time of it currently getting funded....
http://www.wsj.com/articles/gop-lawmakers-advance-bipartisan-effort-to-reauthorize-ex-im-bank-1444406397
"House lawmakers backing the U.S. Export-Import Bank gained enough support Friday to force a vote to renew the agency’s charter, a blow to conservative Republicans who sought to shutter the bank this summer."
There is just no solid political support at this time for any of this kind of stuff.....
The other thing Mike is the deficit came in around $450B and so did the trade deficit... so no new net supply to domestic entities including the Fed
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