Fed funds rate soars

[gonegolfin]

The Fed funds rate soared this morning forcing the Fed to intervene and provide the largest liquidity injection since 9/11/01. This is considerably more than the injection that took place at the "beginning" of the credit crisis last August when banks refused to lend to each other and the Fed had to jump in to provide liquidity. The most recent injection came in two chunks. After the $20 billion injection this morning at 9:40am EST failed to contain the fed funds rate (reportedly soared to 6%, whereas 2% is the target), the Fed responded with an additional $50 billion at 11:50am EST. What did the Fed purchase for $70 billion in newly created dollars (assuming there were no sterilization operations - we will know shortly)? Nearly $49 billion in mortgage-backed securities and about $21 billion in agency debt (Fannie, Freddie, etc.). None of the injections took treasuries as collateral.

Temporary Open Market Operations - Federal Reserve Bank of New York

Brian

 

[editec]

Has been an interesting day on the market, eh?

Lehman files, they're singing AIG's swan song, WaMu looks shakey.

The NY metro region is going to go into a recession due to the number of former finanical workers losing their jobs.

Most of these people made serious incomes, too.

 

[Paulie]

Let's all just forget about this and tune in to "Don't forget the lyrics!" tonight. I mean, it's much more interesting than pondering the possible collapse of our economy.

And let's keep voting for the enablers. You know, the McCain's and the Obama's of the world? The one's who the media tell us are the ONES, but as history has proven, ultimately end up being tools for the further ruining of the country?

But what do I know, I'm a kook.

 

[dilloduck]

Let's all just forget about this and tune in to "Don't forget the lyrics!" tonight. I mean, it's much more interesting than pondering the possible collapse of our economy.

And let's keep voting for the enablers. You know, the McCain's and the Obama's of the world? The one's who the media tell us are the ONES, but as history has proven, ultimately end up being tools for the further ruining of the country?

But what do I know, I'm a kook.

any suggestions ? Maybe someone will finally believe Americans are owned.

 

[Paulie]

any suggestions ? Maybe someone will finally believe Americans are owned.

I think our last shot as a country would be to vote none of the above, or at least someone besides the main 2. Obviously that's not going to happen, and Americans are going to pay the price.

I've situated myself as best as I can to weather the storm, and as far as I'm concerned, anyone who refused to listen deserves every single bit of their potential demise.

 

[dilloduck]

I think our last shot as a country would be to vote none of the above, or at least someone besides the main 2. Obviously that's not going to happen, and Americans are going to pay the price.

I've situated myself as best as I can to weather the storm, and as far as I'm concerned, anyone who refused to listen deserves every single bit of their potential demise.

Financial Darwinism here we come !

 

[Toro]

Yeah, I saw this today. When I checked my Bloomberg, the bid/ask spread was 2-3.

 

[Care4all]

WHEW! down over 500 points! jimminee christmas! and that was with the feds handing nearly 100 billion of our tax dollars out today....

fudge, this might actually become a depression, and skip the recession....man oh man we are in trouble...

see how mccain and palin are now using the dems AMMO and saying we need more regulation....AFTER THE REPUBS were the ones that pushed the deregulating that caused this mess? sheesh...what a bunch of deceivers....

wonder how the conservatives will take to this bait and switch tactic....will they support more regulation vs the deregulation they continually push for and the mccain camp use to support?

 

[Paulie]

WHEW! down over 500 points! jimminee christmas! and that was with the feds handing nearly 100 billion of our tax dollars out today....

fudge, this might actually become a depression, and skip the recession....man oh man we are in trouble...

see how mccain and palin are now using the dems AMMO and saying we need more regulation....AFTER THE REPUBS were the ones that pushed the deregulating that caused this mess? sheesh...what a bunch of deceivers....

wonder how the conservatives will take to this bait and switch tactic....will they support more regulation vs the deregulation they continually push for and the mccain camp used to support?

That wasn't tax dollars, Care. They don't have any of those available these days. That was good old fashioned money supply expansion.

 

[dilloduck]

Hmmmm --America might get a good lesson on how our nations economy functions and who is running the show.

 

[Paulie]

Hmmmm --America might get a good lesson on how our nations economy functions and who is running the show.

PLEASE.

That won't happen until guns are shoved down our throats, and even THEN I imagine some people still being blind.

 

[Care4all]

That wasn't tax dollars, Care. They don't have any of those available these days. That was good old fashioned money supply expansion.

yep paul.....just printing money, but it might as well be a tax hike cuz of the dollar devaluation that comes with it, right???

 

[Care4all]

Hmmmm --America might get a good lesson on how our nations economy functions and who is running the show.

who is really running the show? who are our masters? banks? oil men, lol? illuminati?????

 

[Paulie]

yep paul.....just printing money, but it might as well be a tax hike cuz of the dollar devaluation that comes with it, right???

Yes, the hidden tax. Just pointing out how it wasn't initially our tax dollars that funded the liquidity injections.

As always, the tax payers are the ones who fund things. Whether it be immediately, or down the road.

I can't believe what is happening to this once great country.

 

[dilloduck]

who is really running the show? who are our masters? banks? oil men, lol? illuminati?????

good question --stay tuned for our next episode of " Who's Minding the Store? "

 

[gonegolfin]

WHEW! down over 500 points! jimminee christmas! and that was with the feds handing nearly 100 billion of our tax dollars out today....

fudge, this might actually become a depression, and skip the recession....man oh man we are in trouble...

see how mccain and palin are now using the dems AMMO and saying we need more regulation....AFTER THE REPUBS were the ones that pushed the deregulating that caused this mess? sheesh...what a bunch of deceivers....

wonder how the conservatives will take to this bait and switch tactic....will they support more regulation vs the deregulation they continually push for and the mccain camp use to support?

Do not delude yourself into thinking this mess is just a republican issue. It is not. Not even close.

Brian

 

[gonegolfin]

Yes, the hidden tax. Just pointing out how it wasn't initially our tax dollars that funded the liquidity injections.

Do not jump the gun. It is inflationary for the time being. But unless this liquidity is continuously rolled over for the long term, the loans will expire and the money supply will contract when it does. Alternatively, a reverse repo can be made by the Fed if the funds rate were to fall too low (which would be the same effect as the loan maturing). The figure to watch is the "Repurchase agreements" line item (in the Fed's H.4.1 weekly release) minus the "Reverse repurchase agreements" line item. I expect the difference to grow in this week's release. But it could shrink back in the coming weeks. We shall see.

The Fed reserve credit number has been creeping up again. But there really has not been much new credit created this year (new money). Again, I expect that to increase handsomely this week.

FRB: H.4.1 Release--Factors Affecting Reserve Balances--September 11, 2008

Brian

 

[JimH52]

Do not delude yourself into thinking this mess is just a republican issue. It is not. Not even close.

Brian

Agreed, it is not a GOP mess and both parties need to approach this mess in a bipartisan manner. Will they? I doubt it.

So when they don't who get screwed? You got a mirror?

 

[gonegolfin]

Agreed, it is not a GOP mess and both parties need to approach this mess in a bipartisan manner. Will they? I doubt it.

So when they don't who get screwed? You got a mirror?

I doubt it as well.

Brian

 

[dilloduck]

I doubt it as well.

Brian

In all reality, what could they do about it now ?