Goodbye treasury liquidity

Discussion in 'Trading' started by GEBAKK, Mar 11, 2008.



    The Fed announced a new temporary lending program that will allow participants in the bond markets to swap the mortgage-backed securities that they can't currently sell for highly liquid Treasurys that they can.

    Some guys will be really busy today... Mass-swaps and squeezing liquidity out of US treasuries market... Finally we can rob the State legally. All liquidty will be gone in a few days in treasuries market. Bernanke-disease: Infecting everybody and everything!
  2. Please explain how all liquidity will be gone ( as you claim ) in a few days from the US treasury market?


    If it's possible to swap higher rated bonds for lower ones at the same price, everybody will do so. Within a few days, billions of bonds will be switched to the FED or US government in exchange for a claim on the US government. So: We become more or less shareholders in the State and we are back in Communism Era
  4. Congratulations . . .

    You failed to address my question concerning your claim about "liquidity" drying up in the US Treasury market.


    Don't you see the link? Never seen estimates of total residential mortgages?

    If they privatised FNM and FRE they only had to guarantee part of the collapsing market. By setting up this type of policy it looks like they want to guarantee the complete market...

    Quite a nice guarantee. Ambak offered the same type of guarantee.

    There is just one exception: Securities that are not highly rated are not accepted at the Fed.

    Well that looks like the deal Warren Buffet didn't except last week!


    Let's say: 60 million households, with a 300k$ house. That makes about 18.000 billion $. But guarantee holds only for better rated. But still a vast amount of money-guarantee. Number comes quite close to US total stockmarket capitalization... Nice guarantee!

    Okay, numbers are estimates
  7. BJL


    swap doesn't mean the swap you think it means in this case
  8. For the last time . . .
    The FED just put up 25% of its balance sheet as COLLATERAL!!!

    Figure it out.
  9. BJL


    yeah... keep on dreaming.
  10. You are obviously quite ignorant.

    The FED balance sheet is $800 billion.
    They just pledged $200 billion in exchange for debt ( including mortgage-backed ) securities.

    #10     Mar 11, 2008