Fed and Central Bank

[Diego Mamani]

The Fed is the Central Bank in the US. It goes by other names in other countries. And yes, they deserve a spanking for flooding the system with liquidity. The dollar will continue to lose so much value (against the Euro, gold, oil, land, etc.) that us Piggingtonians will wish we had bought real estate instead of being stuck with worthless greenbacks!

 

 

[Arty]

Fed infusion only buy time, right? If the problem is there, the market has to adjust itself eventually. Because the time diffusion the crash is tempered.

[Arty]

Fed infusion only buy time, right? If the problem is there, the market has to adjust itself eventually. Because the time diffusion the crash is tempered.

[Arty]

Fed infusion only buy time, right? If the problem is there, the market has to adjust itself eventually. Because the time diffusion the crash is tempered.

[drunkle]

fed actions are shrouded in mystery and arcane magics. that’s probably why no one can really comment.

personally, i think the money went straight into certain pockets of those vested in mbs’. trying to unload their holdings, they can’t because no one is buying. the fed opens up, buys out these holdings from their friends (30 bil? chump change, mbs market “worth” some 6 tril). meanwhile, the dollar gets devalued even more, inflation goes up and we all get the fcked.

doesn’t mean the market will be “saved”. the fed actions should probably be taken as an “abandon ship” type warning.

[drunkle]

fed actions are shrouded in mystery and arcane magics. that’s probably why no one can really comment.

personally, i think the money went straight into certain pockets of those vested in mbs’. trying to unload their holdings, they can’t because no one is buying. the fed opens up, buys out these holdings from their friends (30 bil? chump change, mbs market “worth” some 6 tril). meanwhile, the dollar gets devalued even more, inflation goes up and we all get the fcked.

doesn’t mean the market will be “saved”. the fed actions should probably be taken as an “abandon ship” type warning.

[drunkle]

fed actions are shrouded in mystery and arcane magics. that’s probably why no one can really comment.

personally, i think the money went straight into certain pockets of those vested in mbs’. trying to unload their holdings, they can’t because no one is buying. the fed opens up, buys out these holdings from their friends (30 bil? chump change, mbs market “worth” some 6 tril). meanwhile, the dollar gets devalued even more, inflation goes up and we all get the fcked.

doesn’t mean the market will be “saved”. the fed actions should probably be taken as an “abandon ship” type warning.

[XBoxBoy]

Could be wrong… but…

I’m pretty sure that the fed bought both treasuries and agency debt today. That agency debt is what people are referring to as MBS’s. Note however that I believe these securities are backed by Freddie Mae and Freddie Mac. They are conforming loans and already backed by the government. I don’t believe any of the MBSs bought by the fed today are the risky MBSs backed by 2nds and other non-conforming mortgages. (In other words, no non-agency MBSs)

I believe that the fed loans money to the big banks, and takes these securities as collateral. That allows the big banks to function smoothly until things quiet down, and then the banks return the funds and get their bonds back. The hope is that this will keep the markets from going into a full panic.

This will NOT however alleviate any of the basic problems like the fact that there are lots of junk mortgages out there headed for default. (Or that housing seems to be slowly but steadily dragging the economy into recession.) I believe that this is really only a move to stop a full panic from happening. (or put another way, this will allow for an orderly unwinding of problems instead of a chaotic panic)

If one of these big banks should go bankrupt, the fed will hold the collateral loans, (treasuries and agency debt) which it can sell. If the fed can’t sell treasuries or agency debt onto the open market, then well… we’ll talk about that while we wait in the food line.

Just remember, these comments are worth exactly what you paid for them…

XBoxBoy

[XBoxBoy]

Could be wrong… but…

I’m pretty sure that the fed bought both treasuries and agency debt today. That agency debt is what people are referring to as MBS’s. Note however that I believe these securities are backed by Freddie Mae and Freddie Mac. They are conforming loans and already backed by the government. I don’t believe any of the MBSs bought by the fed today are the risky MBSs backed by 2nds and other non-conforming mortgages. (In other words, no non-agency MBSs)

I believe that the fed loans money to the big banks, and takes these securities as collateral. That allows the big banks to function smoothly until things quiet down, and then the banks return the funds and get their bonds back. The hope is that this will keep the markets from going into a full panic.

This will NOT however alleviate any of the basic problems like the fact that there are lots of junk mortgages out there headed for default. (Or that housing seems to be slowly but steadily dragging the economy into recession.) I believe that this is really only a move to stop a full panic from happening. (or put another way, this will allow for an orderly unwinding of problems instead of a chaotic panic)

If one of these big banks should go bankrupt, the fed will hold the collateral loans, (treasuries and agency debt) which it can sell. If the fed can’t sell treasuries or agency debt onto the open market, then well… we’ll talk about that while we wait in the food line.

Just remember, these comments are worth exactly what you paid for them…

XBoxBoy

[XBoxBoy]

Could be wrong… but…

I’m pretty sure that the fed bought both treasuries and agency debt today. That agency debt is what people are referring to as MBS’s. Note however that I believe these securities are backed by Freddie Mae and Freddie Mac. They are conforming loans and already backed by the government. I don’t believe any of the MBSs bought by the fed today are the risky MBSs backed by 2nds and other non-conforming mortgages. (In other words, no non-agency MBSs)

I believe that the fed loans money to the big banks, and takes these securities as collateral. That allows the big banks to function smoothly until things quiet down, and then the banks return the funds and get their bonds back. The hope is that this will keep the markets from going into a full panic.

This will NOT however alleviate any of the basic problems like the fact that there are lots of junk mortgages out there headed for default. (Or that housing seems to be slowly but steadily dragging the economy into recession.) I believe that this is really only a move to stop a full panic from happening. (or put another way, this will allow for an orderly unwinding of problems instead of a chaotic panic)

If one of these big banks should go bankrupt, the fed will hold the collateral loans, (treasuries and agency debt) which it can sell. If the fed can’t sell treasuries or agency debt onto the open market, then well… we’ll talk about that while we wait in the food line.

Just remember, these comments are worth exactly what you paid for them…

XBoxBoy

[donaldduckmoore]

The Fed is just trying to sustain the life of a terminally ill patient for few more days. Eventually, the patient is going to die.

Hopefully, the fed will not lower interest rate. But a market rally like this can really scare the Fed out of the hell and to lead the Fed to do whatever irrational. What is the flip-side of lowering interet rate besides stablizing the housing market? It should not do the US economy any good!

[donaldduckmoore]

The Fed is just trying to sustain the life of a terminally ill patient for few more days. Eventually, the patient is going to die.

Hopefully, the fed will not lower interest rate. But a market rally like this can really scare the Fed out of the hell and to lead the Fed to do whatever irrational. What is the flip-side of lowering interet rate besides stablizing the housing market? It should not do the US economy any good!

[donaldduckmoore]

The Fed is just trying to sustain the life of a terminally ill patient for few more days. Eventually, the patient is going to die.

Hopefully, the fed will not lower interest rate. But a market rally like this can really scare the Fed out of the hell and to lead the Fed to do whatever irrational. What is the flip-side of lowering interet rate besides stablizing the housing market? It should not do the US economy any good!

[ak1]

I read that indeed the Fed opened up to buy both Fed treasures and Agency backed MBs. But everything sold to them was MBs. Even though they are agency backed MBs and deemed low risk, the banks wanted to hold onto the lowest risk assets, their T-bills. So as far as I read it was only agency backed MBs that the Fed bought today.

[ak1]

I read that indeed the Fed opened up to buy both Fed treasures and Agency backed MBs. But everything sold to them was MBs. Even though they are agency backed MBs and deemed low risk, the banks wanted to hold onto the lowest risk assets, their T-bills. So as far as I read it was only agency backed MBs that the Fed bought today.

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