Comments on: Investment Bank Demand for Fed Liquidity Falls

By: Anonymous

Anonymous — Fri, 11 Apr 2008 14:56:00 +0000

Re: “facility fell $8bn from $34bn “

That was just a matter of window dressing for the qtr that just ended, thus, the big push to build up the books and transfer out bad debt in exchange for fresh short term reserves, is like magic for now — up until the end of the next qtr, which will see ramped up demand phased in as needed.

By: S

Fri, 11 Apr 2008 14:01:00 +0000

Fed is thinking about allowing repo of equities at 110% of par

By: Anonymous

Anonymous — Fri, 11 Apr 2008 12:47:00 +0000

I’m no expert, but couldn’t the downgrade of AMBAC have an effect on what the banks can use as collateral with the FED? I thought they could only borrow against AAA grade assets. The downgrade could also signal the reason for the WaMu’s and Citi’s actions in the past couple of days.

By: Anonymous

Anonymous — Fri, 11 Apr 2008 12:44:00 +0000

As CS pointed out, the bids may be low because dealers don’t have enough eligible (i.e. highly rated) collateral to pledge.

And, “the press probably does not want to be accused of fomenting panic.” What press are you reading?!

By: Anonymous

Anonymous — Fri, 11 Apr 2008 12:34:00 +0000

A return to business as usual may be worse than the crisis. The financial policies of the current world governments will eventually precipitate a collapse.

By: S

Fri, 11 Apr 2008 11:57:00 +0000

it is astounding that the WSJ could write an article celebrating Lehman’s “success” at securtizing product to dump on the Fed is a sign of the times. Desperation is everywhere, percalating one assume, right up to the whiote house. We gewt the WSJ re Fed options beyond rate cuts (and the Taylor paper) and then the latest PR all clear offensive by the I-banks, namely Lehman, but now MS and GS. The park avenue ulema must be thinking we bet the farm on highly leveraged vehicles, now what? Taking down the I-banks would be the WWII equivilant of the enola gay’s little boy. So if there is any doubt that they will stiop at nothing think about the geopolitical alternative.

End of empire

By: Richard Kline

Richard Kline — Fri, 11 Apr 2008 10:08:00 +0000

As late as January, the Fed seemed to be pressing the banks to mark at least _some_ of their losses, e.g. CLO write-downs, and take repos at auction, maintaining a facade of normalcy. Now, after having to prop up the ibanks too, the Fed et. al. appear to have decided, er, no, please DON’T make your losses public: we don’t have that much money. Hide them in Level 3 as Mark-to-Mendacity, rebundle them and shuffle around, use any dodge old accounting dodge, or just don’t pick up the phone. In short, the Fed Rescue of the Subcrime Bubble is in do-over mode, trying to shift on the fly from LTCM-style collective action to Japan-style collective-fabulation. None of this is a solution, just a slightly more gradual dissolution.

On what’s the next uranium-toed boot to drop, I’m all ears to know. However, cash-hoarding and the attendant spread spikes point the way, as these actions have been the bow wave of each successive instability point: those in the know feel a hit coming and clench up. . . . Do we have time for a stiff drink before we fly into the mountain??