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comment by mk
mk  ·  289 days ago  ·  link  ·    ·  parent  ·  post: Repo Squeeze Threatens To Spill Over Into Funding Markets

Interesting stuff.

https://en.m.wikipedia.org/wiki/Repurchase_agreement

    A repurchase agreement, also known as a repo, is a form of short-term borrowing, mainly in government securities. The dealer sells the underlying security to investors and buys them back shortly afterwards, usually the following day, at a slightly higher price.

    When transacted by the Federal Open Market Committee of the Federal Reserve in open market operations, repurchase agreements add reserves to the banking system and then after a specified period of time withdraw them; reverse repos initially drain reserves and later add them back. This tool can also be used to stabilize interest rates, and the Federal Reserve has used it to adjust the Federal funds rate to match the target rate.

So the Fed is lending $75B today to help banks shore up. I wonder what they'll buy back the $75B back for. $100B?😂





kleinbl00  ·  289 days ago  ·  link  ·  

Yeah. When the effective rate goes from 2% to 5% overnight there's something up.

I read Courage to Act. The two main themes in that book are (A) I was right all along and everyone who disagreed with me is a doodyhead and (B) We needed to do something right the fuck away or the economy would melt.

"We're throwing $75b at this right the fuck now" is HBO biopic territory. That's pallets-of-cash-to-Baghdad shit.