4 ms·

If it is propaganda, who does it serve? And BTW, where's my $120B overnight loan?

by jstewartmobile 7y ago

ww520 7y ago
When you have $120B asset, the FED will gladly lend you the money. These are collateralized loans.
- MichaelApproved 7y ago
  "asset" Who values what the asset is worth? That was the key issue with the 2008 crash. Banks were making up what the assets were worth and rating agencies were rubber stamping them. When the music stopped, people realized those assets were garbage.
  - quickthrowman 7y ago
    Repo loans are secured with US Treasuries and Agency Debt, which are priced by market participants as “risk-free” assets due to the creditworthiness of the US Government. Treasuries are the most highly liquid securities in the world. There are no toxic assets involved in the repo market.
  - NovemberWhiskey 7y ago
    The only things that are eligible for the Fed repo operations are Treasury securities, agency direct obligations (i.e. other US Govt debt that's not in the form of a Treasury) and mortgage-backed securities issued by Fannie Mae/Freddie Mac/etc.
  - aguyfromnb 7y ago
    >When the music stopped, people realized those assets were garbage. They weren't "garbage"; they were worth less than expected at the time they needed to be liquidated. This caused major problems (obviously), and it's precisely why the Fed stepped in to provide liquidity. Many of those so-called garbage assets turned out to be great investments.
    - MichaelApproved 7y ago
      > Many of those so-called garbage assets turned out to be great investments. Because they were sold at garbage prices. People buy recycled trash and make money doing it but that trash is still garbage.
AnimalMuppet 7y ago
It serves those who wish to paint the Fed as totally irresponsibly flooding money into financial assets. Why? Because they think it serves whatever axe they have to grind. Anti-Wall-Street? Anti-Fed? I suspect the former, given the publication, but I'm not sure. Where's your $120B overnight loan? Well, I'm pretty sure these loans aren't free. Where's your $7 million to pay the interest? [Edit: And even if you have $7 million, do you really want to use it to borrow $120B overnight? You probably don't, unless you really have good reason why you need $120B overnight.]
- deleted 7y ago
  [deleted]
- jstewartmobile 7y ago
  If I invest poorly, and have to eat $7M + losses, no. If I invest poorly, and get a temporary bail-out until my investments pan out, I'd still like that $120B please.

If it is propaganda, who does it serve? And BTW, where's my $120B overnight loan?

ww520 7y ago

When you have $120B asset, the FED will gladly lend you the money. These are collateralized loans.

MichaelApproved 7y ago
"asset" Who values what the asset is worth? That was the key issue with the 2008 crash. Banks were making up what the assets were worth and rating agencies were rubber stamping them. When the music stopped, people realized those assets were garbage.
- quickthrowman 7y ago
  Repo loans are secured with US Treasuries and Agency Debt, which are priced by market participants as “risk-free” assets due to the creditworthiness of the US Government. Treasuries are the most highly liquid securities in the world. There are no toxic assets involved in the repo market.
- NovemberWhiskey 7y ago
  The only things that are eligible for the Fed repo operations are Treasury securities, agency direct obligations (i.e. other US Govt debt that's not in the form of a Treasury) and mortgage-backed securities issued by Fannie Mae/Freddie Mac/etc.
- aguyfromnb 7y ago
  >When the music stopped, people realized those assets were garbage. They weren't "garbage"; they were worth less than expected at the time they needed to be liquidated. This caused major problems (obviously), and it's precisely why the Fed stepped in to provide liquidity. Many of those so-called garbage assets turned out to be great investments.
  - MichaelApproved 7y ago
    > Many of those so-called garbage assets turned out to be great investments. Because they were sold at garbage prices. People buy recycled trash and make money doing it but that trash is still garbage.

AnimalMuppet 7y ago

It serves those who wish to paint the Fed as totally irresponsibly flooding money into financial assets. Why? Because they think it serves whatever axe they have to grind. Anti-Wall-Street? Anti-Fed? I suspect the former, given the publication, but I'm not sure. Where's your $120B overnight loan? Well, I'm pretty sure these loans aren't free. Where's your $7 million to pay the interest? [Edit: And even if you have $7 million, do you really want to use it to borrow $120B overnight? You probably don't, unless you really have good reason why you need $120B overnight.]

deleted 7y ago
[deleted]
jstewartmobile 7y ago
If I invest poorly, and have to eat $7M + losses, no. If I invest poorly, and get a temporary bail-out until my investments pan out, I'd still like that $120B please.