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Stuff's so bad that bailouts are needed, so it's actually good. And historic bailouts at that: the Fed announced a $1.5T cash injection over three days. Up to

Stuff's so bad that bailouts are needed, so it's actually good. And historic bailouts at that: the Fed announced a $1.5T cash injection over three days. Up to that point their entire balance sheet after QE1, QE2, QE3 and the not-QE is was around $4T. All of TARP in 2008 was $400B. Also, the VIX at 65 implies a ~4% daily change: 65% / sqrt(252 trading days in a year = 4.1%.

thedudeabides5 7y ago
True, but the June VIX is still only at ~32, which is like a 2% daily change. Markets are pricing in a disastrous March, a pretty bad April and a pretty choppy May.
- busterarm 7y ago
  Except October-May is when most market activity happens. June is low volatility because nobody in finance was planning on being at work anyway.
busterarm 7y ago
Apples and oranges. This has been entirely focused on the repo market, which the fed has been intervening and providing liquidity on an ongoing basis since like September. That's a major problem but it's not "here free money" but short term loans. It's an entirely different kind of QE but it has been ongoing for 6 months now -- they just raised the limits.
- chasd00 7y ago
  The reaction here over the last couple days to the Fed's move has been disappointing to say the least. No one seems to care about educating themselves why the move was made and instead proclaim a "wall street bailout!", "we have 1.5T for the market but not for single payer healthcare!?". Half seem to not even be aware of the Federal Reserve's job in the economy or even that it's not run by the government. The level of expertise and knowledge on Hackernews for some subjects is incredible but for sure not on this topic
  - busterarm 7y ago
    Turns out that even extremely intelligent people believe obviously stupid things. Believing that we're immune to it is a trap that many in this industry fall into. The number of times I've heard colleagues argue for things that are ignorant, illegal or unethical in my career is too many to count at this point.
    - anthony_r 7y ago
      I think nobody thinks this particular thing is unfair. It's a move of desperation. It's much more ridiculous than unfair, shows you bad things really are. The borrow-buyback scheme that has been going on for years now is highly unethical and will probably blow up, though. I'm short on corporate credit for this reason.
- anthony_r 7y ago
  So you think they will not roll it over indefinitely? It didn't exactly end well last time they tried to "normalize" the situation, in December 2018. It's very likely that this $1.5T (or however much will be eventually used in the market) will stay here forever.

thedudeabides5 7y ago

True, but the June VIX is still only at ~32, which is like a 2% daily change. Markets are pricing in a disastrous March, a pretty bad April and a pretty choppy May.

busterarm 7y ago
Except October-May is when most market activity happens. June is low volatility because nobody in finance was planning on being at work anyway.

busterarm 7y ago

Apples and oranges. This has been entirely focused on the repo market, which the fed has been intervening and providing liquidity on an ongoing basis since like September. That's a major problem but it's not "here free money" but short term loans. It's an entirely different kind of QE but it has been ongoing for 6 months now -- they just raised the limits.

chasd00 7y ago
The reaction here over the last couple days to the Fed's move has been disappointing to say the least. No one seems to care about educating themselves why the move was made and instead proclaim a "wall street bailout!", "we have 1.5T for the market but not for single payer healthcare!?". Half seem to not even be aware of the Federal Reserve's job in the economy or even that it's not run by the government. The level of expertise and knowledge on Hackernews for some subjects is incredible but for sure not on this topic
- busterarm 7y ago
  Turns out that even extremely intelligent people believe obviously stupid things. Believing that we're immune to it is a trap that many in this industry fall into. The number of times I've heard colleagues argue for things that are ignorant, illegal or unethical in my career is too many to count at this point.
  - anthony_r 7y ago
    I think nobody thinks this particular thing is unfair. It's a move of desperation. It's much more ridiculous than unfair, shows you bad things really are. The borrow-buyback scheme that has been going on for years now is highly unethical and will probably blow up, though. I'm short on corporate credit for this reason.
anthony_r 7y ago
So you think they will not roll it over indefinitely? It didn't exactly end well last time they tried to "normalize" the situation, in December 2018. It's very likely that this $1.5T (or however much will be eventually used in the market) will stay here forever.