Economics

[nanningbob]

November 29, 2019 WSJ— My comments in parentheses

(We are now going into our third month of bailing out USA banks every night because they are cash short. At first they said 2~3 weeks, then a couple of months. Now they say the middle of next year. What is going on with our banks being cash short and why are the numbers getting bigger and bigger over time? Notice the longer term 14/15 day notes are getting bigger. The original total notes back in September were in the mid 30 billion. What are we not being told?)

Quote:
The Federal Reserve Bank of New York added $108.95 billion in temporary liquidity to the financial system on Wednesday.

The intervention came in two parts. There were $87.95 billion in overnight repurchase agreements, or repos, and $21 billion in 15-day repos. The central bank took all the securities it was offered.

Since the large interventions started, money-market rates have been well-behaved. The Fed is using temporary operations to tamp down on any possible volatility, while purchasing Treasury bills to build up reserves in the banking system. It hopes that by buying Treasury bills it will be able to cut back on repo interventions at the start of next year.

The Fed currently expects to buy Treasury bills through the middle of next year.

[nanningbob]

My comments in parenthesis:
(Update on the REPO market as the Feds continue drop 80-115 Billion every night into the cash short banking system. As the problem grows 14 day loans to banks have now been extended to 28 day loans. This shows that banks are having a hard time paying back these short term 14 day loans and are extended for the Christmas season. The Fed says they will go back to 14 day loans after the New Year. We’ll see.)

December 9, 2019 WSJ
The Federal Reserve Bank of New York added $81.4 billion in temporary liquidity to financial markets.
Monday’s intervention came in two parts. One was via overnight repurchase agreements, or repos, that totaled $56.4 billion. The other came in a $25 billion 28-day repo aimed at providing liquidity over year’s end.

On Thursday, the Fed reported that its balance sheet had risen from $3.8 trillion in September to $4.07 trillion as of Wednesday. Some $208 billion in repo interventions were also outstanding as of Wednesday.

Is QE4 coming?

https://www.google.com/amp/s/www.cnbc.c ... -says.html

[nanningbob]

Michael J Xxxxx told you this would happen. Here are your consequences of tax cuts and deficits. Deficits and debt are like a cancer which eat at the guts of our economy and financial system. This mirrors the start of economic collapse and last happened in August 2007. Its now been 18 years since the Bush tax cuts and 2 years since Trumps. False Conservative Republicans are irresponsible and refuse to take responsibility for the damage they cause and long term consequences of financial stupidity.

No, this is not caused by the imaginary boogeyman ‘deep state’. This is caused by the financially irresponsible false Conservative movement that has taken over and destroyed the Republican Party.

REPO market news.

(Starting Sept 17, 2019 the Federal Reserve began injecting loans into our cash short banking system. They started with 34 billion of overnight and 14 day loans. This has been going on every night since then. Cash short means the banks dont have enough funds to clear financial transactions every night (like check and credit card payments, etc.) so they borrow money from each other to cover transactions. When the entire banking system doesn’t have enough they borrow from the Federal Reserve. The amount they borrow continues to increase as we head into the fourth month of bank borrowing. The overnight loan time has now increased from 14 to 28 days and the Fed has now increased the amount banks can borrow over New Years week to 150 billion. The Consequences of tax cuts, deficits, federal debt, late payments on loans, defaults, and bankruptcies are weighing down our banking system as the consequences of fiscal irresponsibility is setting in. No healthy government balance sheet, no healthy economy. )

Market Insider December 13, 2019

* The Federal Reserve Bank of New York boosted its repo operations Thursday, increasing planned capital injections as its key lending rate faces year-end pressures.
* The central bank lifted its limit for operations scheduled between December 31 and January 2 to $150 billion from $120 billion, according to a Thursday release.

[Gertje]

Worriying times ahead I presume.

Will this result in the USD collapsing in due course?

[nanningbob]

Historically the Dollar appreciates during bad times because its the world’s currency and USA has the strongest economy. Having said that, the dollar is already strong and I dont know how to read currency wars and tariff wars. That has not existed before in modern economics soooooooo ....... I think thats why the dollar is strong because people dont know how these two will interact.

Sorry best I can do for now. This is a learning curve for me.

Worriying times ahead I presume.

Will this result in the USD collapsing in due course?

[nanningbob]

One more note. I was talking to a friend about the economy and he thought we were going to see something new. He felt that certain portions of the economy are no longer linked together. So while some parts are doing great, others would be so so, and others would be in recession. In other words, there will be areas that will thrive while others stagnate and over all or broad based traditional economic solutions would not be adequate. I found his point thought provoking.

[SteveHopwood]

One more note. I was talking to a friend about the economy and he thought we were going to see something new. He felt that certain portions of the economy are no longer linked together. So while some parts are doing great, others would be so so, and others would be in recession. In other words, there will be areas that will thrive while others stagnate and over all or broad based traditional economic solutions would not be adequate. I found his point thought provoking.

This is what we have here in the UK.

The south east thrives. This includes the capital, London, and the 'Home Counties'. The rest of the UK limps by as best we can.

The UK would fit into Texas several times over, yet I bet that our microcosm will be reflected all over the US. Probably the world - most places are several magnitudes larger than us.

Good luck dealing with that problem. We sure as hell have not solved it over here yet.

[rosst]

One more note. I was talking to a friend about the economy and he thought we were going to see something new. He felt that certain portions of the economy are no longer linked together. So while some parts are doing great, others would be so so, and others would be in recession. In other words, there will be areas that will thrive while others stagnate and over all or broad based traditional economic solutions would not be adequate. I found his point thought provoking.

Druckenmiller's thoughts:
https://www.bloomberg.com/news/videos/2 ... transition

[nanningbob]

if the experts are confused where does that leave us??

Druckenmiller's thoughts:
https://www.bloomberg.com/news/videos/2 ... transition[/quote]

[nanningbob]

Bloomberg December 21, 2019
(Yikes!! Why is the Fed ready to inject almost 1/2 trillion dollars in one day, December 31st, into our banking system??)

Quote:
Since the rate on overnight repo spiked to 10% on Sept. 17 from around 2%, the central bank has been conducting overnight and term repo operations to help rebuild banking reserves, adding $237 billion of liquidity. It’s also prepared to inject up to $490 billion around Dec. 31.

Economics
The Fed Is Entrenched in the Repo Market. How Does It Get Out?
https://www.google.com/amp/s/www.bloomb ... it-get-out