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

[6933]

Yield curve meaning when short term Treasury yields pay more than longer term. An inverted curve on these definitely has precedence in recession predicting.

I can see the 2030 area time frame being problematic in economic terms. As in another deep recession.

Hell, FromMyColdDeadHand, if you and I could juuuust time the market...

[horseman234]

Here's another article with an interesting perspective...

https://seekingalpha.com/article/429...mail_rec=false

[FromMyColdDeadHand]

Here's another article with an interesting perspective...

https://seekingalpha.com/article/429...mail_rec=false

Well that’ll scare the crap out of you. I barely follow it, I think I get the general idea, it’s kind of like they’re saying the Fed is a pilot of an airplane who is not quite sure which way the controls move the airplane.

[THCDDM4]

Well that’ll scare the crap out of you. I barely follow it, I think I get the general idea, it’s kind of like they’re saying the Fed is a pilot of an airplane who is not quite sure which way the controls move the airplane.

Scarier, even. ^That’s the best case scenario.

Worst case- it’s a pilot who has seen trouble ahead for a long time, will not admit or correct course but instead decides to stear into it knowingly, instead of correcting the course when eminent disaster is approaching and there is still hope and admitting mistakes made that lead to the trouble in the first place.

A better example would be an apartment building.

Structurally it is defective, but instead of rectifying the issue, you just keep building on top of it and adding temporary band aid fixes that will keep the building standing for a little while longer while you can squeeze as much profit from the tenants all the while knowing it will lead to a much worse catastrophic failure.

If they would fix the problem now, some people would be hurt and profit lost, corrections would be made and time would heal the wounds- but if you keep it going for as long as possible you can make a killing; sure more people will be hurt and some will die even, but you can run away with all that $$$ and do it all over, again and again...

[recon]

That is some crazy stuff there. A lot of money was passed just to keep this country afloat?

[pinzgauer]

There was a decent Forbes or Fortune article on this yesterday. Explained it without fear-mongering.

Also points out that any easing (money printing) is quickly offset by tightening (absorption). so it's not like the large-scale quantitative-easing, but does temporarily increase the money supply to keep things flowing.

The anomaly is that some banks are willing to pay way higher interest than you would expect. Which implies something is wrong.

The assumption is that some very large banks are under capitalized, with some evidence.

Also it points out the weirdness of those financial transactions in general because at any given time that money is technically owned by two or more entities. Could be as high as 3.

[thepatriot2705]

So, this is a rabbit hole, but intriguing. Apparently Deutsche Bank is close to insolvency and about to declare bankruptcy. The overnight rate shot up to 10% last week. My understanding, maybe incorrect?, is that banks lend to each other overnight. However, there is an unnamed bank that other banks see as to risky to loan to even at a 10% rate. It’s well known that Deutsche is in trouble. Question is how much? They have $49 trillion in notional derivatives exposure. These should be cross covered/hedged. But what percent isn’t?

What if Deutsche Bank had a massive short position in oil and the oil spike from the Saudi attack caused a margin call on Deustche bank and broke the camels back?


The other suspect bank is Commerzbank. Haven’t done much research on them yet.

For some reason the dollar has been strengthing despite the repo market operations. Doesn’t make much sense to me, unless there is major trouble brewing elsewhere.

[FromMyColdDeadHand]

Patriot- that is an interesting theory on D-bank. That would be the classic reason for the problem.

In 2005 and 2007 when we were looking at buying a house, I knew that there was an issue. We even rented because I said "It isn't a housing market, it is a suicide pact". After the GFC I was pissed that I knew that there was a problem, but I couldn't figure out how to make money. Outside of shorting the stock market, what is the concentrated play that makes money off of this?

[horseman234]

Here is another interesting article from Zero Hedge. I believe the Russian economist Kondratiev was substantially correct is his assessment of debt waves, but the economy is far to complex with a myriad of outside factors, to establish any definite timelines.
https://www.zerohedge.com/news/2014-...devastating-us

And here is a graph from Jurrien Timmer at Fidelity showing the correlation between working age adults and interest rates. I apologize to those not on Twitter, but I can't seem to get the image to copy from Twitter to the forum.

https://pbs.twimg.com/media/EFQIFO4X...pg&name=medium

[6933]

Deutsche Bank has been "reported" to be in trouble for the past five yrs.