Comments on: Term Auction Facility Increased to $900 Billion, With No Apparent Success

By: Anonymous

Anonymous — Thu, 09 Oct 2008 00:41:00 +0000

“Note that the 84 day auction is a new feature, presumably created when the TAF went to $450 billion as of late September (although no auctions were conducted at that level; the first auction was today).”

Actually, the Fed announced doing 84-day TAFs on July 30th, and they did their first one on Aug 11th. See: http://www.federalreserve.gov/newsevents/press/monetary/20080730a.htm

By: wintermute

wintermute — Mon, 06 Oct 2008 22:16:00 +0000

The moment has already passed when the Fed could guarantee commercial paper and expect only small losses. The 10 failures in 10 years occurred during benign market conditions riding the infamous Greenspan bubble.

The economic downturn will crater many unsafe corporations, such as GM, with huge commercial paper losses. Additionally whole cities and states are going to require federal bailouts now…

By: Anonymous

Anonymous — Mon, 06 Oct 2008 21:53:00 +0000

It’s teh mega-bailout!

http://fr.youtube.com/watch?v=o3n6BRUVAl0

By: Don

Don — Mon, 06 Oct 2008 21:18:00 +0000

Guaranteeing Libor & CP would be continuation of the same, would it not, except with the added twist that life support is extended to corporations.

Add to that the extended guarantees for money market funds and bank deposits up to $250,000, isn't it not the case that the gamble is all the greater that our generous global benefactors remain generous?

By: joe

joe — Mon, 06 Oct 2008 20:16:00 +0000

Above at 2;31,

s said:

""By late 1923, the German government required 1,783 printing presses, running around the clock, to print money.""

I could be wrong, but it has always been my understanding that both the bank and the printing presses were privately owned, and thus had nothing to do with the government doing anything, except, like today, letting it happen.

By: SlimCarlos

SlimCarlos — Mon, 06 Oct 2008 19:44:00 +0000

>> the direness of the situation will leave the Fed will it will be force to guarantee Libor deposits and commercial paper.

This is a great idea. It will be abused, but with one stroke things would start moving again.

By: Francois

Francois — Mon, 06 Oct 2008 19:25:00 +0000

If guaranteeing LIBOR/CP would be a better solution to unfreeze the credit markets, the question is:
Would BB have the kahunas to turn off the TAF spigot while moving to a CP guarantee?

Is it even doable at this point?

By: Midwest Product

Midwest Product — Mon, 06 Oct 2008 19:21:00 +0000

09/17/08 debt - $ 9,647B
10/02/08 debt - $10,149B

Friday's debt numbers have been released:
10/03/08 debt - $10,186B

Throw another $37B on the pile.

By: ubetchaiam

ubetchaiam — Mon, 06 Oct 2008 19:06:00 +0000

“It seems that Paulson approved his plan before Congress voted….”; Yves can you elaborate in a column about this please?

By: doc holiday

doc holiday — Mon, 06 Oct 2008 19:06:00 +0000

Long Term Capital Management, founded in 1994, was a hedge fund that remarkably generated 40% annual returns in its first 2 years. Its hubris soon grew to epic proportions – Taleb compares LTCM’s strategies to “picking up pennies in front of a steamroller”. They generated many small gains balanced against the unlikely chance of a large loss. In 1998, the steamroller won:

“During the summer of 1998, a combination of large events, triggered by a Russian financial crisis, took place that lay outside [LTCM’s} models. It was a Black Swan. LTCM went bust and almost took down the entire financial system with it, as the exposures were massive. Since their models ruled out the possibility of large deviations, they allowed themselves to take a monstrous amount of risk.”