NECRO'd: FED having to put money into the overnight repo market?

[FromMyColdDeadHand]

https://finance.yahoo.com/news/feder...121019679.html

So the regulations that were put in place to help prevent crises by making sure banks were “healthy“ along with the desire to have advantage in the repo market could lead to the seizing up of the capital markets and of another global crash.

Dark matter and the repo market just shows how little the experts really know....

[armtx77]

https://finance.yahoo.com/news/feder...121019679.html

So the regulations that were put in place to help prevent crises by making sure banks were “healthy“ along with the desire to have advantage in the repo market could lead to the seizing up of the capital markets and of another global crash.

Dark matter and the repo market just shows how little the experts really know....

Only the brightest, from the Ivy League.

[FromMyColdDeadHand]

Someone had another thread about the FED intervention in the overnight market. As you can see from this thread, this is nothing new- but it a recent phenomena, and by phenomena, I mean there isn't a widely agreed upon reason for it, except since Corona when everything is goofy.

[The_War_Wagon]

To paraphrase Al Cervik...




"You either own gold or silver, or you own a popcorn fart."

I'm a contrarian, and a silver bug specifically, although I do like some base metals - like, copper, lead, brass... preferably assembled...

[FromMyColdDeadHand]

https://www.realclearmarkets.com/vid...ff_snider.html

I’ve only listen to it once, so I’m not sure exactly what it all means. But this is one of the most cohesive and coherent discussions of why the federal overnight rate has gone goofy. My rough interpretation is that nobody wants to be left holding a bag of dog crap if on the overnight something happens and all the economy collapses. So that means to me that we are one key stroke or one in the rouge trader away from somebody starting a chain reaction that makes 2008 look like a milk run.

If the Armageddon that these bankers are trying to avoid being involved in is as large as it probably will be, I frankly don’t understand their push towards getting in on a lifeboat. If this goes the way it probably will it’s a complete collapse and the ocean around your lifesboat is on fire.

In the short term, not a problem.

Could be as simple as the financial institutions were used to the easy money; QE. Now that Quantitative Tightening is occurring, there may be a correlation between the Tightening and the banks being hesitant to buy the collateral(assets) being sold by the FED. Most of this collateral was .gov debt, i.e. U.S. Treasuries and Mortgage Backed Securities. Possibly some of these debt instruments such as the MBS' were sub-prime in nature and therefore no one wanted to purchase. Never understood why anyone would take a chance on bad paper. Anyway, U.S. Treasuries are also included in the QT which are generally considered safe. Maybe the banks learned from 2008 and like the cushion large cash reserves provide. Reserves are at an all-time high.

I can't see an overnight event wrecking the economy short of an EMP, solar flare etc. A bad decline jump started by a couple of very bad days; possibly. A sideways market could happen anytime. A 1000pt. drop is just an approx. 3.6% drop. Servicing the interest on an ever increasing debt will eventually cause ripples. Something will have to be done or to happen, but I don't see it in the foreseeable future.

Thanks for that. What had me concerned was the reverse of your argument that there isn't an overnight event that bad- the market seems to think there is, and perhaps even odder is that no one will talk about it. You agree that one explanation is that they act like it is musical chairs with an overnight timeframe for the music stopping?

I agree the US debt has to have an effect eventually, but I've spent 30 years saying it is right around the bend... and... and. It is (or isn't) till it ain't (or is) a problem.

We’ll, Necro’d a necro here, but I wanted to put some context here. IN sept 2019 we were talking about how the overnight fed funds market was going nuts.

Sept 12, the Wuhan Virology Death Machine took their database off-line. At the time, it seemed like the big-smart money was very concerned about a Black Swan event— something that could majorly hurt the world economy, quickly. Maybe something like the realization of a new Chinese flu pandemic.

I think the big-smart money knew about the coming pandemic because with in a week of the Chinese knowing that they had a problem, the over night market got spooked.

[markm]

I think the big-smart money knew about the coming pandemic because with in a week of the Chinese knowing that they had a problem, the over night market got spooked.

They got the memo on the release date of the virus.... err... I mean that a bat in the flea market had a virus... yeah... that's the ticket.

[Honu]

Look how quick Turkey fell yesterday !
We are not them but WOW they got hit quick in some sense but also many saw it coming ?