crash2006 Posted March 11, 2008 Share Posted March 11, 2008 (edited) 200 billion given in treasury bills? in exchange for debt? just wondering if there isnt enough money to lend out? Edited March 11, 2008 by crash2006 Quote Link to comment Share on other sites More sharing options...
ImA20SomethingGetMeOutOfHere Posted March 11, 2008 Share Posted March 11, 2008 When you've got one of these then there's always enough money Quote Link to comment Share on other sites More sharing options...
kilroy Posted March 11, 2008 Share Posted March 11, 2008 200 billion given in treasury bills? in exchange for debt? just wondering if there isnt enough money to lend out? the treasuries sitting on the FED balance shet represents money already printed. Printing occurs by the fed buying treasuries and keeping them on the balance sheet. They explicitly stated that this new auction would not increase the balance sheet i.e. no new printing is taking place. THey are simply swapping treasuries for MBS. These treasuries are then more easily posted as collateral against margin calls for the primary dealers who borrowed them. For example, I am bear stearns and just recieve a margin call for 2bln, the haircut on AAA MBS has been increased from 25% to 50%. As a result I have to post 4bln in AAA MBS, or I can now go to the FED who charge a 20% haircut and post 2.5bln and receive 2bln of treasuries, which I then post as collateral or hte margin call. This is a short term measure which I beleive is actually stopping banks becoming insolvent. It won't work forever but buys a little time. Quote Link to comment Share on other sites More sharing options...
_w_ Posted March 11, 2008 Share Posted March 11, 2008 the haircut on AAA MBS has been increased from 25% to 50% Are these actual numbers? I was under the impression the Fed was offering to swap them 1 for 1. Quote Link to comment Share on other sites More sharing options...
crash2006 Posted March 11, 2008 Author Share Posted March 11, 2008 http://www.telegraph.co.uk/money/main.jhtm...12/cnfed112.xml Quote Link to comment Share on other sites More sharing options...
_w_ Posted March 11, 2008 Share Posted March 11, 2008 200 billion given in treasury bills? in exchange for debt? just wondering if there isnt enough money to lend out? The Fed has $600bn or so of TBills that it can play with. Quote Link to comment Share on other sites More sharing options...
MarkG Posted March 12, 2008 Share Posted March 12, 2008 200 billion given in treasury bills? in exchange for debt? just wondering if there isnt enough money to lend out? One way or another the US taxpayers will end up owning all those bad debts, because it's the only way to prevent a massive banking collapse; which would be considered bad news in an election year. Having the government buy them up will obviously destroy the dollar in the long term (i.e. after the next election), but the alternatives the politico-banking class are looking at are far worse for them in the short term. And, after all, it's only paper. Quote Link to comment Share on other sites More sharing options...
Guest tbatst2000 Posted March 12, 2008 Share Posted March 12, 2008 200 billion given in treasury bills? in exchange for debt? just wondering if there isnt enough money to lend out? Technically, I don't think the fed can go bankrupt as it can always create new money. That doesn't mean that the money it creates will be worth anything of course, but that's a different problem. Quote Link to comment Share on other sites More sharing options...
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