But let's remember that they are 3 day repos. Not permanent by any means. This is why people like Wayne Angell are pushing for a .25 to .50 point rate decrease.
Those repos were given for worthless CDOs. It's bailing out. I'm in serious doubt those repos will be given back
Fed in fall bailout mode. Temporary Open Market Operations Temporary Open Market Operations for August 10, 2007 Last Updated: August 10, 2007 1:53 PM Number of Operations Today: 3 http://www.newyorkfed.org/markets/omo/dmm/temp.cfm Billions of 3 day MBOs .....MBOs=CDOs=ZILCH=SQUAT=BAILOUT
Surprised? No. Pissed yes....FED has bailed out organizations that shouldn't have lent a dime to start with....including the bankers on Wall Street. My local bank uses the traditional model of lending by using customer deposits, such as CDs and then lending out as mortgages. Also local bank holds the mortgage.. they don't act as a broker and try to sell them. I forgot to mention before they lend a dime they expect you to have 20% equity, job, SSN, and documented income for the last three years. FED today just provided a $38billion 3 day loan to the banks on MBOs that were mostly issued as "no documentation required". By doing so the FED has essentially provide the same "no documentation required" to Wall Street.
btw, the fed lets its preferred banks engage in physical transaction of commodities when the price action doesn't suit its inflation models or has the potential to screw up the works..... when Greenspan repeatedly bitched about natural gas price above $10 MMBTU (read this as a select group of futures traders gunning the market), the Fed lets Morgan go up against them sound familiar gold traders??? why is an investment bank allowed by decree to dick around in a single energy contract http://www.federalreserve.gov/boarddocs/Press/orders/2005/20051118/attachment.pdf shortly after this decree, spot nat gas dropped 50%
prop up those who'll repay the favor. 2 days; I just hope they don't keep doing this "as needed" over the next week or 2.
No surprise. I bought gold miner calls in the am before they announced it while everything was being creamed. You saw what the Japan and the ECB did overnight. You knew the market would end up down 400 or 500 points if the Fed did nothing, setting up monday for a 1987 repeat. What were they going to do? Nothing? Of course not. They did the same thing the ECB and Japan did. If you bought gold or miners you made out. Ok, now what would you guess they do next time? That's why I like gold and miners. They can't just print more gold.
Payback due in 3 days. But they can default, too, which might be better for them than holding the CDOs.