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Goldfinger

Fed Adds Billions By Buying Mortgage-backed Debt

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Watch hyperinflation in the make live!

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Aug. 10 (Bloomberg) -- The Federal Reserve added $19 billion in temporary funds to the banking system through the purchase of mortgage-backed securities to help meet demand for cash amid a rout in bonds backed by home loans to riskier borrowers.

At least they're sort of honest and bail out directly.

Edited by Goldfinger

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Why hyperinflation?

This money is available temporarily (probably only over the weekend) whilst the money markets reprice and then it gets repaid...

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Do you think if I took a dump in a box and called it a collateralised dept obligation, the US FED would buy it for 19 Billion?

I really can't believe they did that!

US dollar at 2.10 to the pound buy the end of next week????

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Why hyperinflation?

This money is available temporarily (probably only over the weekend) whilst the money markets reprice and then it gets repaid...

Well, yes. But for some reason I think the Fed will keep some of this stuff. Say, they extensively lend to a subprime lender, take their crap as collateral, and then the lender wents bust. Then the money is out there, and the Fed sits on the MBS. Or do I get this wrong? And this IS inflationary, if you ask me.

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Do you think if I took a dump in a box and called it a collateralised dept obligation, the US FED would buy it for 19 Billion?

I really can't believe they did that!

US dollar at 2.10 to the pound buy the end of next week????

hopefully...I'm off to Vegas next month :D

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Well, yes. But for some reason I think the Fed will keep some of this stuff. Say, they extensively lend to a subprime lender, take their crap as collateral, and then the lender wents bust. Then the money is out there, and the Fed sits on the MBS. Or do I get this wrong? And this IS inflationary, if you ask me.

It does depend on the terms, but if they are using conservative advance rates (lending %ages) and have AAA criteria, for example, then there is no reason it won't work.

The people who would lose are the guys who repo, as the eventual reprice will reduce their yield as more of the cashflow from the ABS is devoted to financing.

Hence the hedgies are toast.

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It does depend on the terms, but if they are using conservative advance rates (lending %ages) and have AAA criteria, for example, then there is no reason it won't work.

The people who would lose are the guys who repo, as the eventual reprice will reduce their yield as more of the cashflow from the ABS is devoted to financing.

Hence the hedgies are toast.

We have black thursday black friday were central banks pour money in, now if we have a black monday and tuesday when central banks dont pour money in then its all screwed. so far seems like a repeat of 1929 crash.

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Do you think if I took a dump in a box and called it a collateralised dept obligation, the US FED would buy it for 19 Billion?

Dunno, but you might as well try. Let me know if they swallow it; sorry, let me rephase that ... :P

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Why hyperinflation?

This money is available temporarily (probably only over the weekend) whilst the money markets reprice and then it gets repaid...

A rose by any other name...

When a real bank loans money, it creates claims (credit) against its money reserves. It is limited in this practise by the scarcity of money.

When a central bank (government) loans money, it actually creates new money to do it. It's a farce, a total misrepresentation of the meaning of the word loan. They are disguising the inflation process by using irrelevant banking terminology, appealing to peoples' understanding of the terms when the reality is something very different.

See?

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- -

"The Fed accepted all mortgage-backed debt as collateral

Doc, I take it you copied & pasted. The article seems to have changed in a rather perverse and unbelievable manner. Can anyone confirm the story as it now stands:

"The Fed accepted only mortgage-backed debt as collateral for this morning's weekend repurchase agreement"

Edited by Sledgehead

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Do you think if I took a dump in a box and called it a collateralised dept obligation, the US FED would buy it for 19 Billion?

I really can't believe they did that!

US dollar at 2.10 to the pound buy the end of next week????

No. the world will sell equities and the only place to go will be into treasuries. The dollar will continue strenghtening.

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No. the world will sell equities and the only place to go will be into treasuries. The dollar will continue strenghtening.

Wait. There is this yellow metal - malleable, corrosion proof, very scarce, very heavy, used as cash for thousands of years. That could be a good place too. Especially if your name is BRIC or OPEC.

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The dollar will continue strenghtening.

I presume you use the word "continue" in much the same way as I do when I say that I "continue" to get younger with each passing year?

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I'm not a shares expert, but I am pretty sure that the current average P/E isn't 32 as it was before the crash of 1929.

But was the leveraging as bad then as it was now?

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But was the leveraging as bad then as it was now?

Well, that all depends whether you are talking stock market listed (cash rich) or private (equity) owned (massively leveraged).

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Here is my take on this. The ECB will continue helicopter cash drops all through next week, until they finally give up since increasing longterm rates force them to. The Fed might meet a similar fate - the Chinese will force them to. If this does not happen, the inflation cat is out of the sack and will start scratching faces. Furthermore, I expect some financial Black Swan for next week - a major European bank collapsing or some huge Anglo-Saxon hedgefund.

Am I completely off? Maybe everything is back to normal on Monday. :lol:

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Here is my take on this. The ECB will continue helicopter cash drops all through next week, until they finally give up since increasing longterm rates force them to. The Fed might meet a similar fate - the Chinese will force them to. If this does not happen, the inflation cat is out of the sack and will start scratching faces. Furthermore, I expect some financial Black Swan for next week - a major European bank collapsing or some huge Anglo-Saxon hedgefund.

Am I completely off? Maybe everything is back to normal on Monday. :lol:

I expect to see losts of various funds close, but a major european bank collapse? I don't think you know what a bank is any more.

No major bank will collapse, if it did get that bad any major bank would just be sold, not collapse. Pff.

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No major bank will collapse, if it did get that bad any major bank would just be sold, not collapse. Pff.

Sorry, that was sort of what I meant, of course. I know that nowadays nothing collapses anymore, it's just bought or monetized.

Pure desperation:

``The Fed has almost unlimited ability to supply liquidity if they feel that is appropriate,'' Rivlin said. She noted that it was ``symbolic'' that the New York Fed's first operation today involved mortgage-backed debt -- the type of securities that investors are unloading.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Edited by Goldfinger

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Anyone, will the ECB just continue with what they're doing next week? Will they inject more and more billions? How many billions are neede out there?

About 7 (SEVEN) times GLOBAL GDP. That is apparently what the derivatives market is 'worth'. Well was worth. I suspect it is in the process of getting revalued. probably to its true physical worth.

Just how much do you get for a few hundred tonnes of scrap paper these days. :ph34r:

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