This post is emotive, shrill and conclusive in tone. Considering it deals with emotionally charged topics, its sure to get a lot of attention. I can take emotive and shrill if the topic had been approached from an interrogative viewpoint, rather than conclusive.
The entire FPP is conclusive, and based on largely on blogs with a few links thrown in (all definitions, btw) to The Fed and other definitive sources to add credibility.
Queries were raised in the thread that would materially change the conclusions in the FPP, questions that remain unaddressed.
- What is the relationship between Non borrowed reserves and Capital Adequacy? FPP gives the impression many banks are ill liquid, perhap insolvent? These deposits are but one component of a financial institutions overall strength. But FPP implies otherwise.
- FPP notes that 52 banks are receiving loans from the TAF but but the Fed refuses to name who they are. then later opines that The Fed is accepting "yucky CDOs" as collateral. As previously asked - how do we the collateral for the loans if The Fed won't name the banks?
- FPP implies ONLY CDOs are being used as collateral, when in fact a wide range of assets could be used.
- FPP stated, without any evidence, that The Fed is "purposely" using two year old data. Please cite source of the evidence driving this conclusion.
- Much of the information in the post and followsup is fundamentally wrong and out of date; the LIBOR rate, for example. When it dropped below Fed Funds this was big news on trading desks. I'm sure it leaked out into The Real World; noting this was no longer spiking would have changed the conclusion of htis FPP
I could go on, but I'll stop here. Overall - would have been a great speculative post. But is weak as a FPP that reaches a conclusion and tries to defend the position.
Generally I don't like to raise these problems, but my queries, informed and well intentioned queries remain unaddressed. Answers to these queries would have materially changed the FPP's conclusion.
I'm off to Amsterdam this AM on a BizTrip, won't be able to check back for six hours or so. But unlike the
posted by Alvy Ampersand at 11:08 PM on January 30 [1 favorite]