Thread by @NathanTankus: "There was obviously a ton of discussion of liquidity this week after repo rates rose a lot and the Fed conducted thcale repurchase agreements since the Great Financial Crisis. To explain what’s happening, we need to properly […]"
Showing posts with label liquidity crisis. Show all posts
Showing posts with label liquidity crisis. Show all posts
Friday, September 20, 2019
Wednesday, October 21, 2015
Treasury issuance is collapsing. A liquidity crisis is coming!
So here's what's happening. There is a massive Treasury shortage because of the austerity, debt ceiling, and the huge reduction in the deficit. We talked about the liquidity crisis that hit the banking system a few weeks ago. The Fed had to inject nearly $700 billion of Treasuries into the market in a single week because of a shortage.
Look at these tables. Last fiscal year (just concluded, Sep 30) the Treasury redeemed $60.4 trillion of Treasuries while it issued $60.8 trillion. That was a mere, $400 billion of net new supply.
Now look at this...
In contrast, look at fiscal year 2014. Treasury redeemed $68.7 trillion, but it issued $69.8 trillion for a net addition of $1.1 trillion.
Issuance has collapsed and it's about to collapse further because we're hitting the debt ceiling. The Fed will be forced to conduct massive repo's, perhaps exhausting its holdings quickly.
Look at these tables. Last fiscal year (just concluded, Sep 30) the Treasury redeemed $60.4 trillion of Treasuries while it issued $60.8 trillion. That was a mere, $400 billion of net new supply.
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| FY 2015 |
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| FY 2014 |
In contrast, look at fiscal year 2014. Treasury redeemed $68.7 trillion, but it issued $69.8 trillion for a net addition of $1.1 trillion.
Issuance has collapsed and it's about to collapse further because we're hitting the debt ceiling. The Fed will be forced to conduct massive repo's, perhaps exhausting its holdings quickly.
Thursday, December 8, 2011
MF Global and Bear Stearns
Is the failure of MF Global similar to the failure of Bear in that it is signaling deep problems with liquidity in the shadow banking system? Here are three posts that explain some of the issues (first post) and details (second and third posts).
Danger Lurks in the Shadows
by Mark Thoma at Economist's View
Has The Imploding European Shadow Banking System Forced The Bundesbank To Prepare For Plan B?
by Tyler Durden at Zero Hedge
Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone Else
by Tyler Durden at Zero Hedge
"Tyler Durden" is a pseudonym used to keep authors who do not wish to reveal their identities anonymous. The author of this post seems quite knowledgeable about shadow banking. Take it for what it is worth.
UPDATE: Here is a short explanation of re-hypothecation
MF Global and the great Wall St re-hypothecation scandal
by Christopher Elias (UK) at Thomson Reuters New & Insight
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