Long bond / Short stock was a reasonable hedging strategy until they banned shortselling.

If the bank might go bankrupt overnight and there is no way of hedging, no one in their right mind would loan them money.

(Somewhere there is a paper or thesis calculating short position hedge on equity depressing stock values equal to interest rate borrowing costs).

anon said in another thread:
“From a monetary and inflation perspective, the key to the transaction is the liability side of the Feds balance sheet. The transaction doesn’t create new reserves or new money supply – it creates locked in government funding for the Fed and shifts existing money supply around. That’s a lot different because the monetary base doesn’t change.”

My comment:
This is the part that I am struggling with … if no new reserves are created (which I agree with since this was new treasury debt that was sold and not treasuries held on the Fed balance sheet), then why the substantial increase in “Reserve Bank credit” in the H.4.1? The “Total factors supplying reserve funds” (asset side) must increase because the “Total factors, other than reserve balances, absorbing reserve funds” also increased due to the the Treasury deposit of proceeds in the “U.S. Treasury, supplementary financing account” line on the H.4.1 (the proceeds from the Treasury debt auction under the Supplemental Financing Program).

In other words, it seems that Treasury credit was increased here, not Fed credit. But the H.4.1 represents it as an increase in Fed credit.

Thanks for your input.

Brian

http://www.bailoutville.com/forums/f5/let-them-eat-cake-64.html

What is the role of FASB you ask, as you agree that SIFMA is a corrupt lobby group?

The Mission of the Financial Accounting Standards Board

http://www.fasb.org/facts/index.shtml#mission

The mission of the FASB is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.

Accounting standards are essential to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, transparent, and understandable financial information. Financial information about the operations and financial position of individual entities also is used by the public in making various other kinds of decisions.

>> Does anyone out there think they have helped make corporate accounting on wall street efficient? Have they thus contributed to the mess we are in, and then have they worked with SIFMA to delay accounting reform, e.g, things like:

>>> Saying that the “risks of too much haste are high,” SIFMA and the ASF suggested that a quick implementation of any proposed changes could further impair bruised balance sheets and drive up capital constraints at a time when very few firms in the financial sector could handle such a burden.

Both organizations said that the changes would impact more than $10 trillion in MBS, ABS and commercial paper facilities and that any change to accounting standards would affect “large markets that provide substantial funding for U.S. business and consumers.”

The trade organizations’ cause was joined on July 22 by House Committee of Financial Services ranking member Spencer Bachus (R-AL), who sent a letter to FASB chairman Robert Herz and Securities and Exchange Commission chairman Christopher Cox echoing similar concern over “serious unintended consequences.”

FASB appears to at least have considered the requests, saying late last week that it would “reconsider the effective date and transition provisions” around its proposed changes to FAS 140 and FIN 46R.

>>>> Corruption, that is what will destroy America and like Japan, it could take decades for reality to gain fractional acceptance.

Who’s more insane—Paulson or this Matt character who leads off these comments?

That is one tough call.

I gotta go with Matt, though. Yes, clearly Paulson’s has an insane ego, but he’s at least been on the public scene for many years. Matt, on the other hand, is convinced that he is some kind of public figure and that we are all talking about is prescience.

“But I have never fought the wrong war.”

YES OF COURSE! This is all about you.

ah ha ha ha
AH HA HA HA

The only difference being, USGOV don’t serve Happy Meals. Instead, it smacks us in the face with a reeking pile of Shinola.

– Juan Falcone

Just sayin’
foolonthehill

OT Yves is there anywhere apicture of you? Make you less of a electron-ic being

Have you ever fought the right one?