Comments on: Treasuries Starting to Look Like Senior Debt of GSEs http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior.html Sun, 22 Nov 2009 00:32:19 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior.html#comment-11427 Anonymous Wed, 16 Jul 2008 06:21:00 +0000 http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior-debt-of-gses/#comment-11427 In its 95-year history, the Fed has never made a clear statement of its policy for dealing with failures. Sometimes it offered assistance to keep the bank or investment bank afloat. Other times it closed the institution. Troubled institutions have no way to know in advance whether they will be saved or strangled. The absence of a clear policy statement increases uncertainty and encourages problem institutions to demand loans and assistance. Large banks ask Congress to pressure the regulators. Taxpayers pay for the mistakes.<br/><br/>So what can taxpayers expect from an increase in the Fed's discretionary authority over investment banks? The likely answer is rescues, delays and lax supervision -- followed by taxpayer-financed bailouts. Throughout its postwar history, the Fed has responded to the interests of large banks and Congress, not the public.<br/><br/>Keep the Fed Away From Investment Banks<br/>http://online.wsj.com/article/SB121617135288456339.html?mod=googlenews_wsj In its 95-year history, the Fed has never made a clear statement of its policy for dealing with failures. Sometimes it offered assistance to keep the bank or investment bank afloat. Other times it closed the institution. Troubled institutions have no way to know in advance whether they will be saved or strangled. The absence of a clear policy statement increases uncertainty and encourages problem institutions to demand loans and assistance. Large banks ask Congress to pressure the regulators. Taxpayers pay for the mistakes.

So what can taxpayers expect from an increase in the Fed’s discretionary authority over investment banks? The likely answer is rescues, delays and lax supervision — followed by taxpayer-financed bailouts. Throughout its postwar history, the Fed has responded to the interests of large banks and Congress, not the public.

Keep the Fed Away From Investment Banks
http://online.wsj.com/article/SB121617135288456339.html?mod=googlenews_wsj

]]> By: Anonymous http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior.html#comment-11426 Anonymous Wed, 16 Jul 2008 06:18:00 +0000 http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior-debt-of-gses/#comment-11426 Outside of the two mortgage-finance agencies, credit is getting more expensive and harder to get. The assets of commercial banks fell 5.8 percent annualized in the three months ended June, the second-largest contraction in the 60-year history of the data, according to Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago. Outside of the two mortgage-finance agencies, credit is getting more expensive and harder to get. The assets of commercial banks fell 5.8 percent annualized in the three months ended June, the second-largest contraction in the 60-year history of the data, according to Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.

]]> By: Doc Holiday http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior.html#comment-11425 Doc Holiday Wed, 16 Jul 2008 05:52:00 +0000 http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior-debt-of-gses/#comment-11425 Somewhat OT, but with bank failures, there will be bank consolidations and less competition, which is another reason FTC should be involved in this mess -- nonetheless -- that consolidation will result in lower yields for bank customers and IMHO, less liquidity as more and more sheep are moved into the same pastures, where supply and demand will encounter a liquidity trap, which will be difficult to escape! Somewhat OT, but with bank failures, there will be bank consolidations and less competition, which is another reason FTC should be involved in this mess — nonetheless — that consolidation will result in lower yields for bank customers and IMHO, less liquidity as more and more sheep are moved into the same pastures, where supply and demand will encounter a liquidity trap, which will be difficult to escape!

]]> By: Anonymous http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior.html#comment-11419 Anonymous Wed, 16 Jul 2008 04:42:00 +0000 http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior-debt-of-gses/#comment-11419 I believe the CDS on treasuries are denominated in EUR. I believe the CDS on treasuries are denominated in EUR.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior.html#comment-11399 Anonymous Tue, 15 Jul 2008 22:35:00 +0000 http://www.nakedcapitalism.com/2008/07/treasuries-starting-to-look-like-senior-debt-of-gses/#comment-11399 I'm confused as to why there would be a CDS market for Treasury bonds/notes other than to fleece the gullible.<br/><br/>Treasury debt is denominated in dollars and the govt owns the printing presses that print the dollars. They can alway print as much as they need to make any coupon/principal payment.<br/><br/>There might be some 'technical default' in that the debt ceiling isn't passed, but the recovery value would surely be close to par.<br/><br/>Yet another example of why the CDS market is just an upscale three-card monte operation. I’m confused as to why there would be a CDS market for Treasury bonds/notes other than to fleece the gullible.

Treasury debt is denominated in dollars and the govt owns the printing presses that print the dollars. They can alway print as much as they need to make any coupon/principal payment.

There might be some ‘technical default’ in that the debt ceiling isn’t passed, but the recovery value would surely be close to par.

Yet another example of why the CDS market is just an upscale three-card monte operation.

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