FDIC about to become a barren wasteland of dried up fail?
jr deputy accountant
[£ing the esoterica known only to initiates]
accounting enthusiast, hipster artist, mother, authorized snark distributor,
disbeliever in government, believer in regulation.
Thursday, May 28, 2009
As much I would love to go on and on about the epic failure of the FDIC – the moral hazard, the broken promise, the complete stupidity of an “insurance” fund that felt compelled to pass on collecting premiums from member banks for nearly a decade, the list goes on – I think the time has come for Congress to start slicing the tumors off of America’s crippled host. In case there are no doctors in the house on Capitol Hill, let me simplify this: we are dying. Treasurys are showing extreme strain and without that little scheme to feed off of, we’re fucked. Was that simple enough for everyone? Great!
The FDIC may soon have to put itself on its own watch list. If the 300+ “trouble” banks it is tracking don’t take it down, Tim Geithner‘s retarded PPIP scheme (no offense to retards intended, of course) surely will. Why is a broke agency guaranteeing PPIP any damn way?
Yahoo finance is usually a joke. Oh who am I kidding? This is a joke too. Still, it’s nice to see what the MSM are saying while wading around in the kiddie pool. Via Yahoo Finance, FDIC Fund Running Dry (no shit, huh!):
At the end of the first quarter there were 305 ‘problem institutions’ with a total of $220.0 billion in assets, up from 252 institutions and $159.4 billion in assets at the end of 2008. At the end of the quarter, the Deposit insurance fund was at just $13.0 billion, or 0.27% of insured deposits, a decline of 24.7% in the quarter alone.
Call me crazy but that doesn’t look too well for the FDIC.
Congress has already approved a $500 billion line of credit to the FDIC. Without a doubt, that line of credit is going to have to be tapped.
This does emphasize the insanity of having the FDIC provide the guarantees for the PPIP [Public-Private Investment Program]. The fund simply does not have the resources available to do it. The money for the inevitable large losses that the fund will take on the program will come from that line of credit. [my emphasis]
The prospect of the FDIC paying back that loan anytime soon from increased assessments on the banks is extremely remote. This is simply a back-door bailout of the FDIC, structured as a line of credit so it does not increase the reported budget deficit.
Using the FDIC to backstop the PPIP program is simply a way to bypass Congress. There is no way that Congress could not have approved the line of credit and let the FDIC become insolvent. By all rights, the assessments on the banks should be raised to make up for the shortfall in the FDIC, but now is not exactly the time to do it, since it would simply deplete their capital at a time when they desperately need to improve their capital base.
Isn’t bypassing Congress illegal? I’m just sayin…
Curiously, the article goes into JPM/WaMu/FDIC and we all know where thatparticular rape and pillage is headed:
In the 12 months to 3/31/09 there have been 44 failures with $381.4 billion in assets at a total cost to the fund of $20.1 billion. The 5.3% of failed assets cost to the fund over the last year is somewhat misleading since by far the largest failure was Washington Mutual, which was bought by J.P. Morgan (JPM) at no cost to the FDIC (but very generously backstopped by the Fed).
That’s kind of a lie. Why? The Fed isn’t going to have to pay href=”http://www.jrdeputyaccountant.com/2009/05/delaware-judge-to-rule-on-wamus-case.html”>if a Delaware judge determines next month that the FDIC swept in and sold WaMu off under false pretenses, now will it?
Check this out and see if you can tell me what is wrong with this particular picture:
“Assets?” More like Fed liabilities plugged with unicorns and rainbows, wtf is this? It’s all made up! Conjured from nowhere like the fair maiden crying as Rumpelstiltskin spins gold! That’s probably a good analogy now that I think about it; soon, the Fed will accept first-borns as collateral for TALF
loans right along with questions CMBSs and pieces of paper with “thanks for the bailout, bitches” written on them.
Damn! We are going to need a miracle at this point. Or a whole hell of a lot more drugs to keep the market on crack. Whatcha gonna do, Bair? Looks to me as if you have a mess on your hands!
More on this topic (What’s this?)
Senate Expands FDIC Credit Line To $100 Billion (Zero Hedge, 5/6/09)
FDIC Sold $470 Million Commercial Loans In March At 46.4 Cents On The Dollar (Zero Hedge, 5/11/09)
FDIC “Problem Bank” List Jumps to 305 (Option ARMageddon, 5/27/09)
Labels: bank failures, FAILout, FDIC, JP Morgan, PPIP, tim geithner, WaMu
fed failure evident now in treasury market, time to readjust the qe scheme?
Quantitative easing FAIL!
The Fed is dead-set on destruction and we know this, but hopefully they realize that the ominous signs are all around. Sharks in the water? Yeah right, this is bigger than that.
>
href=”http://blogs.wsj.com/economics/2009/05/28/fed-may-have-to-tweak-treasury-purchase-program/”>Via WSJ’s Real Time Economics, the bond market is screaming in agony but will the Fed listen?
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
As much I would love to go on and on about the epic failure of the FDIC – the moral hazard, the broken promise, the complete stupidity of an “insurance” fund that felt compelled to pass on collecting premiums from member banks for nearly a decade, the list goes on – I think the time has come for Congress to start slicing the tumors off of America’s crippled host. In case there are no doctors in the house on Capitol Hill, let me simplify this: we are dying. Treasurys are showing extreme strain and without that little scheme to feed off of, we’re fucked. Was that simple enough for everyone? Great!
The FDIC may soon have to put itself on its own watch list. If the 300+ “trouble” banks it is tracking don’t take it down, Tim Geithner‘s retarded PPIP scheme (no offense to retards intended, of course) surely will. Why is a broke agency guaranteeing PPIP any damn way?
Yahoo finance is usually a joke. Oh who am I kidding? This is a joke too. Still, it’s nice to see what the MSM are saying while wading around in the kiddie pool. Via Yahoo Finance, FDIC Fund Running Dry (no shit, huh!):
At the end of the first quarter there were 305 ‘problem institutions’ with a total of $220.0 billion in assets, up from 252 institutions and $159.4 billion in assets at the end of 2008. At the end of the quarter, the Deposit insurance fund was at just $13.0 billion, or 0.27% of insured deposits, a decline of 24.7% in the quarter alone.
Call me crazy but that doesn’t look too well for the FDIC.
Congress has already approved a $500 billion line of credit to the FDIC. Without a doubt, that line of credit is going to have to be tapped.
This does emphasize the insanity of having the FDIC provide the guarantees for the PPIP [Public-Private Investment Program]. The fund simply does not have the resources available to do it. The money for the inevitable large losses that the fund will take on the program will come from that line of credit. [my emphasis]
The prospect of the FDIC paying back that loan anytime soon from increased assessments on the banks is extremely remote. This is simply a back-door bailout of the FDIC, structured as a line of credit so it does not increase the reported budget deficit.
Using the FDIC to backstop the PPIP program is simply a way to bypass Congress. There is no way that Congress could not have approved the line of credit and let the FDIC become insolvent. By all rights, the assessments on the banks should be raised to make up for the shortfall in the FDIC, but now is not exactly the time to do it, since it would simply deplete their capital at a time when they desperately need to improve their capital base.
Isn’t bypassing Congress illegal? I’m just sayin…
Curiously, the article goes into JPM/WaMu/FDIC and we all know where thatparticular rape and pillage is headed:
In the 12 months to 3/31/09 there have been 44 failures with $381.4 billion in assets at a total cost to the fund of $20.1 billion. The 5.3% of failed assets cost to the fund over the last year is somewhat misleading since by far the largest failure was Washington Mutual, which was bought by J.P. Morgan (JPM) at no cost to the FDIC (but very generously backstopped by the Fed).
That’s kind of a lie. Why? The Fed isn’t going to have to pay href=”http://www.jrdeputyaccountant.com/2009/05/delaware-judge-to-rule-on-wamus-case.html”>if a Delaware judge determines next month that the FDIC swept in and sold WaMu off under false pretenses, now will it?
Check this out and see if you can tell me what is wrong with this particular picture:
“Assets?” More like Fed liabilities plugged with unicorns and rainbows, wtf is this? It’s all made up! Conjured from nowhere like the fair maiden crying as Rumpelstiltskin spins gold! That’s probably a good analogy now that I think about it; soon, the Fed will accept first-borns as collateral for TALF
loans right along with questions CMBSs and pieces of paper with “thanks for the bailout, bitches” written on them.
Damn! We are going to need a miracle at this point. Or a whole hell of a lot more drugs to keep the market on crack. Whatcha gonna do, Bair? Looks to me as if you have a mess on your hands!
More on this topic (What’s this?)
Senate Expands FDIC Credit Line To $100 Billion (Zero Hedge, 5/6/09)
FDIC Sold $470 Million Commercial Loans In March At 46.4 Cents On The Dollar (Zero Hedge, 5/11/09)
FDIC “Problem Bank” List Jumps to 305 (Option ARMageddon, 5/27/09)
Labels: bank failures, FAILout, FDIC, JP Morgan, PPIP, tim geithner, WaMu
fed failure evident now in treasury market, time to readjust the qe scheme?
Quantitative easing FAIL!
The Fed is dead-set on destruction and we know this, but hopefully they realize that the ominous signs are all around. Sharks in the water? Yeah right, this is bigger than that.
>
href=”http://blogs.wsj.com/economics/2009/05/28/fed-may-have-to-tweak-treasury-purchase-program/”>Via WSJ’s Real Time Economics, the bond market is screaming in agony but will the Fed listen?
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
At the end of the first quarter there were 305 ‘problem institutions’ with a total of $220.0 billion in assets, up from 252 institutions and $159.4 billion in assets at the end of 2008. At the end of the quarter, the Deposit insurance fund was at just $13.0 billion, or 0.27% of insured deposits, a decline of 24.7% in the quarter alone.
Congress has already approved a $500 billion line of credit to the FDIC. Without a doubt, that line of credit is going to have to be tapped.
This does emphasize the insanity of having the FDIC provide the guarantees for the PPIP [Public-Private Investment Program]. The fund simply does not have the resources available to do it. The money for the inevitable large losses that the fund will take on the program will come from that line of credit. [my emphasis]
The prospect of the FDIC paying back that loan anytime soon from increased assessments on the banks is extremely remote. This is simply a back-door bailout of the FDIC, structured as a line of credit so it does not increase the reported budget deficit.
Using the FDIC to backstop the PPIP program is simply a way to bypass Congress. There is no way that Congress could not have approved the line of credit and let the FDIC become insolvent. By all rights, the assessments on the banks should be raised to make up for the shortfall in the FDIC, but now is not exactly the time to do it, since it would simply deplete their capital at a time when they desperately need to improve their capital base.
Curiously, the article goes into JPM/WaMu/FDIC and we all know where thatparticular rape and pillage is headed:
In the 12 months to 3/31/09 there have been 44 failures with $381.4 billion in assets at a total cost to the fund of $20.1 billion. The 5.3% of failed assets cost to the fund over the last year is somewhat misleading since by far the largest failure was Washington Mutual, which was bought by J.P. Morgan (JPM) at no cost to the FDIC (but very generously backstopped by the Fed).
That’s kind of a lie. Why? The Fed isn’t going to have to pay href=”http://www.jrdeputyaccountant.com/2009/05/delaware-judge-to-rule-on-wamus-case.html”>if a Delaware judge determines next month that the FDIC swept in and sold WaMu off under false pretenses, now will it?
Check this out and see if you can tell me what is wrong with this particular picture:
“Assets?” More like Fed liabilities plugged with unicorns and rainbows, wtf is this? It’s all made up! Conjured from nowhere like the fair maiden crying as Rumpelstiltskin spins gold! That’s probably a good analogy now that I think about it; soon, the Fed will accept first-borns as collateral for TALF
loans right along with questions CMBSs and pieces of paper with “thanks for the bailout, bitches” written on them.
Damn! We are going to need a miracle at this point. Or a whole hell of a lot more drugs to keep the market on crack. Whatcha gonna do, Bair? Looks to me as if you have a mess on your hands!
More on this topic (What’s this?)
Senate Expands FDIC Credit Line To $100 Billion (Zero Hedge, 5/6/09)
FDIC Sold $470 Million Commercial Loans In March At 46.4 Cents On The Dollar (Zero Hedge, 5/11/09)
FDIC “Problem Bank” List Jumps to 305 (Option ARMageddon, 5/27/09)
Labels: bank failures, FAILout, FDIC, JP Morgan, PPIP, tim geithner, WaMu
fed failure evident now in treasury market, time to readjust the qe scheme?
Quantitative easing FAIL!
The Fed is dead-set on destruction and we know this, but hopefully they realize that the ominous signs are all around. Sharks in the water? Yeah right, this is bigger than that.
>
href=”http://blogs.wsj.com/economics/2009/05/28/fed-may-have-to-tweak-treasury-purchase-program/”>Via WSJ’s Real Time Economics, the bond market is screaming in agony but will the Fed listen?
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
In the 12 months to 3/31/09 there have been 44 failures with $381.4 billion in assets at a total cost to the fund of $20.1 billion. The 5.3% of failed assets cost to the fund over the last year is somewhat misleading since by far the largest failure was Washington Mutual, which was bought by J.P. Morgan (JPM) at no cost to the FDIC (but very generously backstopped by the Fed).
That’s kind of a lie. Why? The Fed isn’t going to have to pay href=”http://www.jrdeputyaccountant.com/2009/05/delaware-judge-to-rule-on-wamus-case.html”>if a Delaware judge determines next month that the FDIC swept in and sold WaMu off under false pretenses, now will it?
Check this out and see if you can tell me what is wrong with this particular picture:
“Assets?” More like Fed liabilities plugged with unicorns and rainbows, wtf is this? It’s all made up! Conjured from nowhere like the fair maiden crying as Rumpelstiltskin spins gold! That’s probably a good analogy now that I think about it; soon, the Fed will accept first-borns as collateral for TALF
loans right along with questions CMBSs and pieces of paper with “thanks for the bailout, bitches” written on them.
Damn! We are going to need a miracle at this point. Or a whole hell of a lot more drugs to keep the market on crack. Whatcha gonna do, Bair? Looks to me as if you have a mess on your hands!
More on this topic (What’s this?)
Senate Expands FDIC Credit Line To $100 Billion (Zero Hedge, 5/6/09)
FDIC Sold $470 Million Commercial Loans In March At 46.4 Cents On The Dollar (Zero Hedge, 5/11/09)
FDIC “Problem Bank” List Jumps to 305 (Option ARMageddon, 5/27/09)
Labels: bank failures, FAILout, FDIC, JP Morgan, PPIP, tim geithner, WaMu
fed failure evident now in treasury market, time to readjust the qe scheme?
Quantitative easing FAIL!
The Fed is dead-set on destruction and we know this, but hopefully they realize that the ominous signs are all around. Sharks in the water? Yeah right, this is bigger than that.
>
href=”http://blogs.wsj.com/economics/2009/05/28/fed-may-have-to-tweak-treasury-purchase-program/”>Via WSJ’s Real Time Economics, the bond market is screaming in agony but will the Fed listen?
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
“Assets?” More like Fed liabilities plugged with unicorns and rainbows, wtf is this? It’s all made up! Conjured from nowhere like the fair maiden crying as Rumpelstiltskin spins gold! That’s probably a good analogy now that I think about it; soon, the Fed will accept first-borns as collateral for TALF
loans right along with questions CMBSs and pieces of paper with “thanks for the bailout, bitches” written on them.
Damn! We are going to need a miracle at this point. Or a whole hell of a lot more drugs to keep the market on crack. Whatcha gonna do, Bair? Looks to me as if you have a mess on your hands!
More on this topic (What’s this?)
Senate Expands FDIC Credit Line To $100 Billion (Zero Hedge, 5/6/09)
FDIC Sold $470 Million Commercial Loans In March At 46.4 Cents On The Dollar (Zero Hedge, 5/11/09)
FDIC “Problem Bank” List Jumps to 305 (Option ARMageddon, 5/27/09)
Labels: bank failures, FAILout, FDIC, JP Morgan, PPIP, tim geithner, WaMu
fed failure evident now in treasury market, time to readjust the qe scheme?
Quantitative easing FAIL!
The Fed is dead-set on destruction and we know this, but hopefully they realize that the ominous signs are all around. Sharks in the water? Yeah right, this is bigger than that.
>
href=”http://blogs.wsj.com/economics/2009/05/28/fed-may-have-to-tweak-treasury-purchase-program/”>Via WSJ’s Real Time Economics, the bond market is screaming in agony but will the Fed listen?
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
Damn! We are going to need a miracle at this point. Or a whole hell of a lot more drugs to keep the market on crack. Whatcha gonna do, Bair? Looks to me as if you have a mess on your hands!
More on this topic (What’s this?)
Senate Expands FDIC Credit Line To $100 Billion (Zero Hedge, 5/6/09)
FDIC Sold $470 Million Commercial Loans In March At 46.4 Cents On The Dollar (Zero Hedge, 5/11/09)
FDIC “Problem Bank” List Jumps to 305 (Option ARMageddon, 5/27/09)
Labels: bank failures, FAILout, FDIC, JP Morgan, PPIP, tim geithner, WaMu
fed failure evident now in treasury market, time to readjust the qe scheme?
Quantitative easing FAIL!
The Fed is dead-set on destruction and we know this, but hopefully they realize that the ominous signs are all around. Sharks in the water? Yeah right, this is bigger than that.
>
href=”http://blogs.wsj.com/economics/2009/05/28/fed-may-have-to-tweak-treasury-purchase-program/”>Via WSJ’s Real Time Economics, the bond market is screaming in agony but will the Fed listen?
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
More on this topic (What’s this?)
Senate Expands FDIC Credit Line To $100 Billion (Zero Hedge, 5/6/09)
FDIC Sold $470 Million Commercial Loans In March At 46.4 Cents On The Dollar (Zero Hedge, 5/11/09)
FDIC “Problem Bank” List Jumps to 305 (Option ARMageddon, 5/27/09)
fed failure evident now in treasury market, time to readjust the qe scheme?
Quantitative easing FAIL!
The Fed is dead-set on destruction and we know this, but hopefully they realize that the ominous signs are all around. Sharks in the water? Yeah right, this is bigger than that.
>
href=”http://blogs.wsj.com/economics/2009/05/28/fed-may-have-to-tweak-treasury-purchase-program/”>Via WSJ’s Real Time Economics, the bond market is screaming in agony but will the Fed listen?
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
>
href=”http://blogs.wsj.com/economics/2009/05/28/fed-may-have-to-tweak-treasury-purchase-program/”>Via WSJ’s Real Time Economics, the bond market is screaming in agony but will the Fed listen?
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in Treasurys by the fall, yet long-end Treasury yields have continued to trek stubbornly higher since March and are now beginning to pull mortgage rates up with them.
To keep rates from moving even higher from here, now is the prime time for the Fed to fine-tune its programs. That may not necessarily mean increasing the amount it buys — which might have the unwanted effect of undermining the dollar. Rather, the Fed should be more targeted in the maturities it buys, Treasury market participants urge.
Treasurys maturing in five to 10 years should be the focus of the Fed’s buying, said Ward McCarthy, managing director at Stone & McCarthy. McCarthy sees no need to increase the overall amounts, but urges the Fed to dedicate “as much heavy artillery as possible” to those maturities.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
Cute, but I argue here that the Fed doesn’t have any heavy artillery and exhausted its options quite some time ago. They’ve got some Nerf arrows, a slingshot, and a bag of rubberbands. Good luck.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
You couldn’t pay people to take this shit! Now that’s funny.
Perhaps if we were going to head down this path eventually anyway we should have done so a tad bit earlier on? I seem to remember my favorite Fed President recommending as much while Janet Yellen was still blabbering on about F-bills.
So, uh, what happened to that plan to sop up the excess funny money sloshing around the system with Treasurys? Looks to me like the only thing we’ll be sopping up here is blood.
Higher Treasury yields come amid tentative signs of economic improvement. Traders and investors are also demanding higher returns in response to the huge amount of new Treasurys on offer this year at a time when there are fewer primary dealers to buy the debt. Goldman Sachs estimates the government could sell some $3.5 trillion in Treasurys this fiscal year ending September, dwarfing the amount of Fed buying.
This week, yields rocketed decisively higher, breaking through key psychological levels. Adding to the sell-off were worries about the U.S. ratings outlook, even though the three major ratings firms all noted that the U.S. triple-A rating isn’t under any threat for now. Higher Treasury yields upended the mortgage bond market — the 10-year Treasury yield is the benchmark for fixed-rate mortgages — further exacerbating the sell-off in government debt.
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jr deputy accountant[£ing the esoterica known only to initiates]
accounting enthusiast, hipster artist, mother, authorized snark distributor,
disbeliever in government, believer in regulation.
fdic about to become a barren wasteland of dried up fail?
Thursday, May 28, 2009
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