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Fed. 3day RP + 5.00B [ Net DRAIN -5.50B ]
http://www.gmtfo.com/RepoReader/OMOps.aspx
08:00 am : S&P futures vs fair value: -2.40. Nasdaq futures vs fair value: -3.30. Stock futures lag fair value ahead of Friday's opening bell. After yesterday's close The Washington Post reported the Treasury and the Fed are working on the sale of Lehman Brothers (LEH) through a consortium of firms. The report followed word that from The Wall Street Journal that Bank of America (BAC) is in talks with Lehman. Meanwhile, Reuters reported the Treasury will guarantee the debt and mortgage backed securities of Fannie Mae (FNM) and Freddie Mac (FRE) until at least 2010. Washington Mutual (WM) announced its capital levels surpass the well-capitalized level for the third quarter and expects provisions to be around $4.5 billion for the quarter. It also stated it has a strong liquidity position of $50 billion. Credit rating agency Fitch downgraded WaMu to BBB- and gave the firm a negative outlook
Fed.(2)3)4) 7day RP + 8.00B [net Drain -10.25B ]
Fed.(3) 5day RP + 8.00B
Fed.(4) 1day RP + 10.50B
http://www.gmtfo.com/RepoReader/OMOps.aspx
Fed. 14day RP + 5.00 [Drain Sofar -2.00B
http://www.gmtfo.com/RepoReader/OMOps.aspx
Fed May Expand Funding Aid to Banks in a `Mother of Year-Ends'
By Craig Torres and Liz Capo McCormick
Sept. 11 (Bloomberg) -- The Federal Reserve may have to increase the cash it provides to banks and brokers, already a record, to help them balance their books at the end of the year.
Six bank failures in the past two months and rising concern about Lehman Brothers Holdings Inc.'s capital levels pushed lenders' borrowing costs to near a four-month high yesterday. They may climb further as companies rush for cash to settle trades and buttress their balance sheets at year-end.
``This could be the mother of year-ends,'' said Brian Sack, vice president of Macroeconomic Advisers LLC in Washington, who used to serve as head of monetary and financial market analysis at the Fed. ``The markets will need extraordinary actions to get through it.''
One option is for banks and brokers to increase the loans they take out directly with the Fed; the central bank reports on the figures today. Officials could also offer options on its biweekly loan auctions or introduce special repurchase agreements to straddle the end of the year, economists said.
When policy makers sought to head off a potential funding crunch with the year 2000 changeover, they auctioned liquidity options to the primary dealers of U.S. Treasuries.
The central bank's latest weekly report on direct loans is scheduled for release at 4:30 p.m. New York time. Lending to commercial banks from the so-called discount window averaged $19 billion in the week through Sept. 3, the fifth record in seven weeks.
Funding Costs
Traders in the forward markets, where financial instruments are sold for future delivery, are pricing three-month cash from December to March at 90 basis points over expectations for the federal funds rate. That's up from 85 basis points at the start of the week and an average of 7 basis points average in 2006.
``If banks are unwilling to lend to other banks, then they are unwilling to lend to you and me,'' says Stan Jonas, chief executive officer at Axiom Management Partners LLC, a New York investment firm. ``The market anticipates that we will be in a heightened state of credit risk.''
As the credit crunch erupted a year ago, Fed officials introduced new tools to stem a jump in borrowing costs. In December, they created the Term Auction Facility to inject cash to commercial banks.
The Term Securities Lending Facility was unveiled in March as a resource for primary dealers of Treasuries, and offers a loan of U.S. government bonds in exchange for collateral including asset-backed debt. After Bear Stearns Cos.'s collapse, the Fed the same month gave dealers access to direct loans.
January Extension
Acknowledging persistent funding strains, policy makers in July extended the programs through January. They also introduced sales of options on the TSLF to help brokers get through quarter-ends.
``We will continue to review all of our liquidity facilities to determine if they are having their intended effects or require modification,'' Fed Chairman Ben S. Bernanke said Aug. 22.
Even if the Fed succeeds in easing the liquidity squeeze, it can do little to alleviate the underlying problem about the solvency of companies that invested in securities whose values are sliding. Worldwide, financial firms have posted $510 billion of writedowns and losses in the crisis, and raised just $359 billion of capital.
``Liquidity tools by definition can only have so much impact,'' said Dino Kos, former head of financial markets at the New York Fed and now a managing director at Portales Partners LLC, a New York research firm.
`Solvency Problem'
The Fed ``can alleviate the problem by helping institutions finance these bad assets,'' Kos said. ``But by itself, that doesn't lift the price of these assets. You still have an underlying solvency problem.''
The need for cash is exacerbated by rising credit losses and difficulty in obtaining capital to offset them.
The government seizure of Fannie Mae and Freddie Mac this week may have heightened perceptions of risk in investing in U.S. financial firms. The two companies failed to raise capital even after the Treasury won unlimited powers to inject funds as a backstop in July. After the Sept. 7 takeover, shareholders were nearly wiped out.
``Why would anyone inject equity capital into a financial institution if a few weeks later the government comes in and renders it worthless?'' said Axel Merk, president of Merk Investments, a Palo Alto, California-based fund manager. ``The slope of bailouts is slippery and expensive.''
Falling Stocks
Prices of fixed-rate preferred stock, a security typically used by banks to raise new capital, fell an average of 11 cents to 69.8 cents on the dollar this week, with the biggest drop in a decade Sept. 8, according to Merrill Lynch & Co. index data.
Lehman lost more than half its value this week, closing at $7.25 yesterday. The New York-based investment bank yesterday reported a $3.9 billion third-quarter loss, the biggest in its 158-year history.
Lehman hasn't tapped the Fed for cash since April, a person briefed on the matter said yesterday. Any such loans would appear on the Fed's Primary Dealer Credit Facility figures to be released today; there was no outstanding balance last week.
To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net.; Liz Capo McCormick in New York at +1- Emccormick7@bloomberg.net
Last Updated: September 11, 2008
Don Coxe: #msg-32077944
Mighty_Shadow2002, read chichi2
about those #s, l am a freebe here, he will answer.
got to run now anyway, Dr appt
[but being new to investing what do these numbers actually mean in layman terms..
Best wishes
George]
Fed.
7b 14day
12b 7day
6b 2day
16.75b 1day
Fed matures 41.75B !!!! tomo
break down later starts 7B 14 day
Fed auctions another $25 billion in loans to banks
Wednesday September 10, 10:21 am ET
By Jeannine Aversa, AP Economics Writer
Fed auctions another $25 billion in loans to banks to ease credit stresses
WASHINGTON (AP) -- The Federal Reserve has auctioned another $25 billion in loans to squeezed banks to help them overcome credit problems.
The central bank on Wednesday released the results of its most recent auction. It's part of an ongoing program started in December that seeks to ease financial turmoil and credit stresses. Those programs -- along with the depressed housing market -- have shaken the economy, forcing companies and people to clamp down.
ADVERTISEMENT
In the latest auction, commercial banks paid an interest rate of 2.530 percent for the 28-day loans. There were 53 bidders. The Fed received bids for $46.24 billion worth of the loans.
On Tuesday, the Fed auctioned $25 billion worth of 84-days loans to banks.
The Fed in mid-December announced it was creating an auction program that would give banks a new way to get short-term loans from the central bank and help them over the credit hump. In late July, the Fed expanded the program, making the longer 84-day loans available, besides the existing 28-day loans.
The worst global credit crisis seen in decades has made banks reluctant to lend to each other, which has crimped lending to individuals and businesses.
The smooth flow of credit is the economy's oxygen. It permits people to finance big-ticket purchases, such as homes and cars, and helps businesses expand operations and hire workers.
Fed. 1day RP + 16.75B [ all ADD ]
http://www.gmtfo.com/RepoReader/OMOps.aspx
W@G2 QQQQ 09/10/08 for a 09/12/08 close
44.44 bob3
44.30 Farooq
44.25 rayrohn
43.30 frenchee
41.15 kookiekook
OPEC to cut output by 520,000 bpd: OPEC president
Sep 9 09:19 PM US/Eastern
The OPEC oil group has agreed to cut its real output by 520,000 barrels per day in the next 40 days, OPEC's President and Algerian Energy Minister Chakib Khelil said Tuesday.
Schiff: Paulsons Quick Draw
by Peter Schiff
Treasury Secretary Henry Paulson, the man who said that subprime was contained and that the Bazooka in his pocket would never be used, now assures us that the bailout of Fannie Mae and Freddie Mac will be costless to taxpayers. Despite the near euphoria that the plan has sparked on Wall Street, the move will go down in history as the biggest policy blunder of all time, and will be credited as a pivotal point in the financial collapse of the American economy. The ultimate cost to Unites States citizens will be in the range of hundreds of billions of dollars, perhaps more.
The original idea that gave birth to Freddie and Fannie, which is to make housing more affordable to average Americans, should now be seen as farcical. Their new goal is to keep housing prices high. Absent Freddie and Fannie, housing prices would fall sharply and the mortgage market would stabilize. Americans would once again be able to buy affordable houses with mortgages they could actually repay - just like their grandparents did. Instead they will keep overpaying for houses, burdening themselves with excessive payments in the process, and ultimately sticking taxpayers with the bill when they default.
In contrast to Paulson's continuous misreading of the market, I have consistently predicted the failure of Freddie and Fannie. I did so in my book Crash Proof, and in numerous speeches, commentaries and television appearances. If you have not yet done so, click here to watch these eight YouTube clips of my presentation back in 2006 to a convention of mortgage bankers. I also was quick to point out that Paulson's Bazooka would not remain holstered for long. See the following two commentaries "Armed and Dangerous" and "Congress Taps Paulson's Helmet" available here.
There is absolutely no substance to Paulson's insistence that based on the government's first claim on the future profits of Fannie and Freddie, the plan offers protection for taxpayers. There will be no future profits, just more heavy losses. Americans will now have unlimited ability to continue to overpay for houses and commit to mortgages they can't afford. In fact, the plan insures that eventual public sector losses will vastly exceed those that would have befallen the private sector in a free-market resolution.
Paulson claims that his goal is to stabilize the mortgage market. But the best way to do so would be to allow housing prices to fall to a market clearing level. As long as home prices remain artificially high, the risks of mortgage lending will keep credit tight, and the high costs of mortgage payments will keep potential buyers on the side-lines. With private lenders justly cautious, the government intends to hold open the lending spigots, without the pesky concerns over losses or financial risk. The hope is that the new lending will prevent home prices from falling further. It won't work. The government "solution" will simply delay the fall of artificially high home valuations and temporarily preserve the illusion of prosperity.
In order to preserve current home prices, the government will be forced to maintain the lax lending standards that got us into this mess in the first place. Since all the losses will now be borne by taxpayers, those lax standards will be much more problematic. The moral hazard that existed prior to this bailout has become that much more hazardous. Every mortgage now insured by Fannie and Freddie is the equivalent of a U.S. Treasury bond. This allows anyone to borrow on the full faith and credit of the U.S. government so long has the money is used to buy a house. In addition, mortgage lending will now be a government function, run with Post Office-like efficiency.
Of course the biggest collateral damage caused by Paulson's bazooka is the large hole ripped through the already tattered U.S. Constitution. If the government can do this, does anyone believe there is anything it can't do? In effect the Federal government now has absolute power to corrupt absolutely.
For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read Peter Schiff's book "Crash Proof: How to Profit from the Coming Economic Collapse." Click here to order a copy today.
More importantly, don't wait for reality to set in. Protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com, download our free research report on the powerful case for investing in foreign equities available at www.researchreportone.com, and subscribe to our free, on-line investment newsletter at http://www.europac.net/newsletter/newsletter.asp.
http://www.safehaven.com/showarticle.cfm?id=11191&pv=1
Fed auctions another $25 billion in loans to banks
Tuesday September 9, 10:06 am ET
By Jeannine Aversa, AP Economics Writer
Fed auctions another $25 billion in loans to banks to ease credit stresses
WASHINGTON (AP) -- The Federal Reserve has auctioned another $25 billion in loans to squeezed banks to help them overcome credit problems.
The central bank on Tuesday released the results of its most recent auction. It's part of an ongoing program started in December that seeks to ease financial turmoil and credit stresses. Those programs -- along with the depressed housing market -- have badly pounded the economy, forcing companies and people to clamp down.
In the latest auction, commercial banks paid an interest rate of 2.670 percent for the 84-day loans. There were 38 bidders. The Fed received bids for $31.64 billion worth of the loans. The auction was conducted on Monday with the results made public on Tuesday.
The Fed in mid-December announced it was creating an auction program that would give banks a new way to get short-term loans from the central bank and help them over the credit hump. In late July, the Fed expanded the program, making the longer 84-day loans available, besides the existing 28-day loans.
The worst global credit crisis seen in decades has made banks reluctant to lend to each other, which has crimped lending to individuals and businesses.
The smooth flow of credit is the economy's oxygen. It permits people to finance big-ticket purchases, such as homes and cars, and helps businesses expand operations and hire workers.
Wanting to avert a broader panic that could endanger the entire U.S. financial system, the Fed has taken a number of extraordinary actions to provide relief. In its broadest extension of lending authority since the 1930s, the central bank agreed in March to temporarily let investment firms obtain emergency, overnight loans directly from the Fed, a privilege that only commercial banks had been granted.
The Bush administration stepped in Sunday to snatch control of troubled mortgage giants Fannie Mae and Freddie Mac, effectively putting the government at the heart of the mortgage-finance business. The takeover has the potential to put billions of taxpayers' dollars at risk. The action means that Fannie and Freddie won't be tapping the Fed's emergency borrowing program for a quick source of cash. The Fed in July told the companies that they could draw loans directly from the central bank if they needed cash to stay afloat.
**Fed.(1)2) 2day RP + 6.00B [net Drain -2.50B]
Fed.(2) 1 Day Forward 28day + 20.00B
http://www.gmtfo.com/RepoReader/OMOps.aspx
Fed. 1day RP + 8.50B [net Add +6.50B ]
http://www.gmtfo.com/RepoReader/OMOps.aspx
So we're both long XLF right?
Right.
from SI
W@G1 QQQQ 09/08/08 for a 09/10/08 close is
45.35 bob3
45.32 Kookiekooks
44.70 Farooq
44.50 rayrohn
44.00 northam43
41.00 frenchee
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Futures (3) + World Indices
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Dn. definitive WHY, just gut shock
but timing at least gives better judgements
GSE plan expected at Treasury news conference
Sun Sep 7, 2008 8:54am EDT
WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart will hold a news conference at 11 a.m. on Sunday, the Treasury Department said.
The officials are expected to announce plans for a federal takeover of mortgage finance companies Fannie Mae and Freddie Mac. FHFA regulates the two companies, the largest sources of U.S. home mortgage finance.
The move to take control of the two companies, which could amount to the largest financial bailout in U.S. history, is a bid to ward off further damage to a housing market in its deepest downturn since the Great Depression.
Rep. Barney Frank, chairman of the U.S. House of Representatives Financial Services Committee, told The Washington Post the federal government was expected to control the companies for at least a year as it considers whether they should remain government-run, or be restructured.
Fannie Mae and Freddie Mac own or guarantee almost half of the country's $12 trillion in outstanding home mortgage debt. They have suffered combined losses of nearly $14 billion in the past four quarters.
In an emergency move in July, Congress gave the Treasury the authority to extend an undetermined amount of credit to the companies or take a stake in them if they ran into trouble.
Loan Giant Overstated the Size of Its Capital Base
September 7, 2008
By GRETCHEN MORGENSON and CHARLES DUHIGG
The government’s planned takeover of Fannie Mae and Freddie Mac, expected to be announced on Sunday, came together after advisers poring over the companies’ books for the Treasury Department concluded that Freddie’s accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter.
The proposal to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship also grew out of deep concern among foreign investors that the companies’ debt might not be repaid. Falling home prices, which are expected to lead to more defaults among the mortgages held or guaranteed by Fannie and Freddie, contributed to the urgency, regulators said.
Investors who own the companies’ common and preferred stock will suffer. Holders of debt, including many foreign central banks, are expected to receive government backing. Top executives of both companies will be pushed out, according to those briefed on the plan.
The cost of the government’s intervention could rise into tens of billions of dollars and will probably be among the most expensive rescues ever financed by taxpayers. Both presidential nominees expressed support for the government’s plans. Senator Barack Obama, Democrat of Illinois, said as he campaigned in Indiana that not acting could place the housing market in further distress.
Senator John McCain’s running mate, Gov. Sarah Palin, said at a rally in Colorado Springs that Fannie Mae and Freddie Mac have become too big and too expensive .
The takeover comes on the heels of a rescue of the investment bank Bear Stearns, which was sold to JPMorgan Chase in a deal backed by taxpayers. Already, the housing crisis has cost investors and consumers hundreds of billions of dollars.
The big question now is whether the federal government’s move to take over Fannie and Freddie will restore investor confidence in the nation’s credit markets, help stabilize the stock market and keep loans flowing to creditworthy borrowers.
Fannie and Freddie, by buying mortgages, provide banks and other financial institutions with fresh money to make new loans, a vital lubricant for the housing and credit markets.
As a result of the government’s intervention, the cost of borrowing for Fannie Mae and Freddie Mac should decline, because the government will be insuring their worst debts. Equally important, because the government is backing the companies, they will continue to buy and sell home loans.
But the plan will probably do little to stop home prices from falling further. And foreclosures are almost certain to rise.
Just a week ago, Treasury officials were still considering a wide variety of options for Fannie Mae and Freddie Mac, ranging from doing nothing to taking over the companies completely, according to people with knowledge of those discussions.
The Treasury secretary, Henry M. Paulson Jr., who won authority from Congress last month to use taxpayer money to bolster the companies, always maintained that he hoped never to use that power. But, as the companies’ stocks continued to languish and their borrowing costs rose, some within the Treasury Department began urging Mr. Paulson to intervene quickly.
Then, last week, advisers from Morgan Stanley hired by the Treasury Department to scrutinize the companies came to a troubling conclusion: Freddie Mac’s capital position was worse than initially imagined, according to people briefed on those findings. The company had made decisions that, while not necessarily in violation of accounting rules, had the effect of overstating the companies’ capital resources and financial stability.
Indeed, one person briefed on the company’s finances said Freddie Mac had made accounting decisions that pushed losses into the future and postponed a capital shortfall until the fourth quarter of this year, which would not need to be disclosed until early 2009. Fannie Mae has used similar methods, but to a lesser degree, according to other people who have been briefed.
Representatives of both companies did not return calls or declined to comment. But officials who have been briefed on the plans said late Saturday that the companies had agreed to the takeover.
On Friday, executives from Fannie Mae and Freddie Mac were ordered to appear in the offices of their regulator, James B. Lockhart, in separate meetings. They were told that regulators were exercising their authority to place Fannie Mae and Freddie Mac in conservatorship, which would allow for uninterrupted operation of the companies but would put them under the control of Mr. Lockhart.
The details of those plans continued to be worked out on Saturday, when the Federal Reserve chairman, Ben S. Bernanke, met with Mr. Paulson, Mr. Lockhart and key company executives in Washington.
While Freddie Mac’s accounting woes make it easier for regulators to force the company into conservatorship, there was more resistance from Fannie Mae, according to people familiar with the discussions. Once the government took action against Freddie Mac, however, confidence in Fannie Mae would certainly waver. Given Fannie Mae’s declining financial condition, the company has few options but to concede to the government’s demands.
Accusations of questionable accounting are not new for either company. Earlier this decade, both companies paid large fines and ousted their top executives after accounting scandals.
Freddie Mac’s current chief executive and chairman, Richard F. Syron, joined the company in 2003 after the former managers revealed that they had manipulated earnings by almost $5 billion. The next year, Fannie Mae’s chief executive, Daniel H. Mudd, was promoted to the top spot after that company was accused of accounting errors totaling $6.3 billion.
The accounting issues that brought so much urgency to the bailout appear to center on Freddie Mac’s capital cushion, the assets that regulators require them to keep on hand to cover losses.
The methods used to bolster that cushion have caused serious concerns among the companies’ regulator, outside auditors and some investors. For example, while Freddie Mac’s portfolio contains many securities backed by subprime loans, made to the riskiest borrowers, and alt-A loans, one step up on the risk ladder, the company has not written down the value of many of those loans to reflect current market prices.
Executives have said that they intend to hold the loans to maturity, meaning they will be worth more, and they need not write down their value. But other financial institutions have written down similar securities, to comply with “mark-to-market” accounting rules. Freddie Mac holds roughly twice as many of those securities as Fannie Mae.
Freddie Mac and Fannie Mae have also inflated their financial positions by relying on deferred-tax assets — credits accumulated over the years that can be used to offset future profits. Fannie maintains that its worth is increased by $36 billion through such credits, and Freddie argues that it has a $28 billion benefit.
But such credits have no value unless the companies generate profits. They have failed to do so over the last four quarters and seem increasingly unlikely to the next year. Moreover, even when the companies had soaring profits, such credits often could not be used. That is because the companies were already able to offset taxes with other credits for affordable housing.
Most financial institutions are not allowed to count such credits as assets. The credits cannot be sold and would disappear in a receivership. Removing those credits from assets would probably push both companies’ capital below the regulatory requirements.
Regulators are also said to be scrutinizing whether the companies were trying to manage their earnings by waiting to add to their reserves. Both companies have gradually increased their reserves for loan losses — Fannie’s reserves today stand at $8.9 billion, and Freddie’s at $5.8 billion.
Other companies, like private mortgage insurers, have been quicker to identify large losses and have set aside much greater amounts. Fannie and Freddie have dribbled out bad news with each quarterly announcement, suggesting they may be trying to manage this process.
Finally, regulators are concerned that the companies may have mischaracterized their financial health by relaxing their accounting policies on losses, according to people familiar with the review. For years, both companies have effectively recognized losses whenever payments on a loan are 90 days past due. But, in recent months, the companies said they would wait until payments were two years late. As a result, tens of thousands of loans have not been marked down in value.
The companies have injected their own capital into pools of securities containing these loans, arguing that their new policies are helping more borrowers.
Under conservative accounting methods, changing these policies would not have any impact on the companies’ books. However, people briefed on the accounting inquiry said that Freddie Mac may have delayed losses with the change.
“We have just had to nationalize the two largest financial institutions in the world because of policy makers’ inaction,” said Josh Rosner, an analyst at Graham Fisher, an independent research firm in New York, and a longtime critic of the government-sponsored enterprises. “Since 2003, when these companies’ accounting came under question, policy makers have done nothing. Even though they had every reason to know that the housing market’s problems would not be contained to subprime and would bring down the houses of Fannie and Freddie.”
Jeff Zeleny contributed from Terre Haute, Ind., and Elisabeth Bumiller from Colorado Springs.
http://www.nytimes.com/2008/09/07/business/07fannie.html?_r=1&hp=&oref=slogin&pagewanted=print
Not convinced yet...Who pays for this?
Cramer cost many folks $$$ past month.
OT: Just off phone ameritrade same
bitch streamer not real time....got my free trades but pushed a bit on time frame **90days, it's like a piggy bank for you.
OT: OK here just a bit of rain &
wind outer banks....but have family Cape Cod & # 1 son leaving
from vacation on main coast.
•• Earnings Calendar for the Week Ahead ••
B = Before-Market Hours
D = During-Market Hours
A = After-Market Hours
REPORTS TO BE ANNOUNCED FOR WEEK OF SEP 8 - SEP 12
#msg-31976604
Courtesy...Bullwinkle
Fed. Ops: 41.00B Matures this week.
Mon: 2.00B 3day
Wed: 20.00B 28day
Thu: 7.00B 14day
>>> 12.00B 7day
========================================================
Temp Ops:
=======================================================
Public Debt:
Limit ~ $10,600 T
9/04 ~~ $9,668 T
New $10.6 trillion debt ceiling.
#msg-30998680
=========================================================
The Slosh Report:
http://www.gmtfo.com/RepoReader/OMOps.aspx
=========================================================
Some perspective on Millions, Billions and Trillions
A Million dollars in crisp new thousand $ bills tightly wound stack would be about 4 ½ inches high.
A Billion dollars would stack over 365 feet high, roughly the height of a small skyscraper.
A Trillion dollars would stack 69 miles into the blackness of sub orbital space, beyond the sight of the human eye, and perhaps the human imagination. A trillion is a ridiculously large number.
Fed. Ops: 41.00B Matures this week.
Mon: 2.00B 3day
Wed: 20.00B 28day
Thu: 7.00B 14day
>>> 12.00B 7day
========================================================
Temp Ops:
=======================================================
Public Debt:
Limit ~ $10,600 T
9/04 ~~ $9,668 T
New $10.6 trillion debt ceiling.
#msg-30998680
=========================================================
The Slosh Report:
http://www.gmtfo.com/RepoReader/OMOps.aspx
=========================================================
Some perspective on Millions, Billions and Trillions
A Million dollars in crisp new thousand $ bills tightly wound stack would be about 4 ½ inches high.
A Billion dollars would stack over 365 feet high, roughly the height of a small skyscraper.
A Trillion dollars would stack 69 miles into the blackness of sub orbital space, beyond the sight of the human eye, and perhaps the human imagination. A trillion is a ridiculously large number.
Treasury Is Close to Finalizing
Plan to Backstop Fannie, Freddie
By DEBORAH SOLOMON and DAMIAN PALETTA
September 5, 2008 5:26 p.m.
WASHINGTON -- The Treasury Department is close to finalizing a plan to help shore up mortgage giants Fannie Mae and Freddie Mac, according to people familiar with the matter.
• Foreclosure Effect on Home Prices May Be SmallPrecise details of Treasury's plan couldn't be learned. The plan is expected to involve a creative use of Treasury's new authority to make a capital injection into the beleaguered giants.
The plan includes changes to senior management at both companies, according to a person familiar with the plans.
An announcement could come as early as this weekend.
On Friday, a series of high-level meetings were planned between Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, the chief executives of Fannie Mae and Freddie Mac and the companies' new regulator, the Federal Housing Finance Agency.
Treasury has been working with bankers at Morgan Stanley to use its newfound authority, granted by Congress in July, to devise a way to prop up the mortgage giants, which have been pummeled by investors in recent weeks.
The two giants are vital cogs in the U.S. housing market and their financial woes have threatened to worsen the bursting of the housing bubble.
"We are making progress on our work," said Treasury spokeswoman Jennifer Zuccarelli. She declined to comment further on Treasury's plans.
Write to Deborah Solomon at deborah.solomon@wsj.com and Damian Paletta at damian.paletta@wsj.com
Margin calls being ready, these pops
are bullsh!t, arranged for & by the Boyz JMHO
Fed. 3day RP + 2.00B [Net DRAIN -2.50B]
The Slosh Report:
http://www.gmtfo.com/RepoReader/OMOps.aspx
Futures (3) + World Indices
http://www.cme.com/trading/dta/del/globex.html
http://money.cnn.com/data/premarket/
http://quotes.ino.com/exchanges/futboard/current/
- Has links for quotes and charts.
World Indices (2) Mini Charts
Updates every 60sec ~ Watch the dates!!
http://www.wwfn.com/commentary/oscharts.html
http://www.allstocks.com/markets/World_Charts/Asian_Stock_Markets/asian_stock_markets.html
Banks borrow more from Fed; Wall Street takes pass
Thursday September 4, 4:32 pm ET
By Jeannine Aversa, AP Economics Writer
Fed: Banks borrow more from emergency lending program; investment firms take pass
WASHINGTON (AP) -- Banks borrowed more over the past week from the Federal Reserve's emergency lending program, while Wall Street firms took a pass for the fifth week in a row.
A Fed report released Thursday said commercial banks averaged $18.98 billion in daily borrowing over the past week. That compared with a daily average of $18.47 billion in the previous week.
For the week ending Sept. 3, Wall Street firms didn't take out any loans, the fifth straight period of no action. Their borrowing, however, averaged as high as $38.1 billion a day over the course of a week in early April.
Investment houses in March were given similar loan privileges as commercial banks after a run on Bear Stearns pushed what was the nation's fifth-largest investment bank to the brink of bankruptcy. The situation raised fears that other Wall Street firms might be in jeopardy.
Bear Stearns was eventually taken over by JPMorgan Chase & Co. in a deal that involved the Fed's financial backing.
The identities of commercial banks and investment houses that borrow are not released. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.
In the broadest use of the central bank's lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. The Fed has since extended those loan privileges into next year. Originally they were supposed to last through mid-September.
More recently, the Fed has said troubled mortgage giants Fannie Mae and Freddie Mac could draw emergency loans from the central bank if they needed. There was no indication in the weekly report that they had done so.
Separately, as part of efforts to relieve credit strains, the Fed auctioned nearly $25 billion in Treasury securities to investment companies Thursday. The Fed received requests for $45 billion worth of the securities.
In exchange for the 28-day loans of Treasury securities, bidding companies can put up as collateral more risky investments. These include certain mortgage-backed securities and bonds secured by federally guaranteed student loans.
The auction program, which began March 27, is intended to make investment companies more inclined to lend to each other. A second goal is providing relief to the distressed market for mortgage-linked securities and for student loans.
Fed.(2)3) 7day RP + 12.00B [net Drain -0.50 ]
Fed.(3) 1day RP + 4.50B
The Slosh Report:
http://www.gmtfo.com/RepoReader/OMOps.aspx
Fed. 14day RP + 5.00B [ SoFar
The Slosh Report:
http://www.gmtfo.com/RepoReader/OMOps.aspx
Huge ice sheet breaks loose in Canadian arctic
The Associated Press
updated 57 minutes ago
Large pieces of ice float off after separating from the
Ward Hunt Ice Shelf July 29. That shelf has lost about
eight square miles and the Serson shelf 47 square miles
as the Markham Ice Shelf has separated and gone adrift.
'Shocking event' another sign of warming in polar frontier, say scientists
TORONTO - A chunk of ice shelf nearly the size of Manhattan has broken away from Ellesmere Island in Canada's northern Arctic, another dramatic indication of how warmer temperatures are changing the polar frontier, scientists said Wednesday.
Derek Mueller, an Arctic ice shelf specialist at Trent University in Ontario, told The Associated Press that the 4,500-year-old Markham Ice Shelf separated in early August and the 19-square-mile shelf is now adrift in the Arctic Ocean.
"The Markham Ice Shelf was a big surprise because it suddenly disappeared. We went under cloud for a bit during our research and when the weather cleared up, all of a sudden there was no more ice shelf. It was a shocking event that underscores the rapidity of changes taking place in the Arctic," said Mueller.
Mueller also said that two large sections of ice detached from the Serson Ice Shelf, shrinking that ice feature by 47 square miles — or 60 percent — and that the Ward Hunt Ice Shelf has also continued to break up, losing an additional eight square miles.
Mueller reported last month that seven square miles of the 170-square-mile and 130-feet-thick Ward Hunt shelf had broken off.
Greenland glacier also threatened
This comes on the heels of unusual cracks in a northern Greenland glacier, rapid melting of a southern Greenland glacier, and a near record loss for Arctic sea ice this summer. And earlier this year a 160-square mile chunk of an Antarctic ice shelf disintegrated.
"Reduced sea ice conditions and unusually high air temperatures have facilitated the ice shelf losses this summer," said Luke Copland, director of the Laboratory for Cryospheric Research at the University of Ottawa. "And extensive new cracks across remaining parts of the largest remaining ice shelf, the Ward Hunt, mean that it will continue to disintegrate in the coming years."
Formed by accumulating snow and freezing meltwater, ice shelves are large platforms of thick, ancient sea ice that float on the ocean's surface but are connected to land.
Ellesmere Island was once entirely ringed by a single enormous ice shelf that broke up in the early 1900s. All that is left today are the four much smaller shelves that together cover little more than 299 square miles.
Martin Jeffries of the U.S. National Science Foundation and University of Alaska Fairbanks said in a statement Tuesday that the summer's ice shelf loss is equivalent to over three times the area of Manhattan, totaling 82 square miles — losses that have reduced Arctic Ocean ice cover to its second-biggest retreat since satellite measurements began 30 years ago.
"These changes are irreversible under the present climate and indicate that the environmental conditions that have kept these ice shelves in balance for thousands of years are no longer present," said Mueller.
During the last century, when ice shelves would break off, thick sea ice would eventually reform in their place.
'Scary scenario'
"But today, warmer temperatures and a changing climate means there's no hope for regrowth. A scary scenario," said Mueller.
The loss of these ice shelves means that rare ecosystems that depend on them are on the brink of extinction, said Warwick Vincent, director of Laval University's Centre for Northern Studies and a researcher in the program ArcticNet.
"The Markham Ice Shelf had half the biomass for the entire Canadian Arctic Ice Shelf ecosystem as a habitat for cold, tolerant microbial life; algae that sit on top of the ice shelf and photosynthesis like plants would. Now that it's disappeared, we're looking at ecosystems on the verge of distinction,' said Mueller.
Along with decimating ecosystems, drifting ice shelves and warmer temperatures that will cause further melting ice pose a hazard to populated shipping routes in the Arctic region — a phenomenon that Canada's Prime Minister Stephen Harper seems to welcome.
Harper announced last week that he plans to expand exploration of the region's known oil and mineral deposits, a possibility that has become more evident as a result of melting sea ice. It is the burning of oil and other fossil fuels that scientists say is the chief cause of manmade warming and melting ice.
Harper also said Canada would toughen reporting requirements for ships entering its waters in the Far North, where some of those territorial claims are disputed by the United States and other countries.
http://www.msnbc.msn.com/id/26529937/
Schiff: In The Eye of The Storm
Peter Schiff
Sep 4, 2008
As we enter the height of the hurricane season, it may be worthwhile to recall, when considering the economy at large, the particular deception that lurks in the "eye" of the storm. After a raging tempest, the sudden appearance of the calm 'eye' can all too easily encourage people to leave their shelter in order to assess and even repair damage, exposing themselves to the often more devastating second leg of the hurricane.
We have long warned our readers of a coming real estate crash which would then lead to a credit crunch, and eventually a major round of bank failures. We have argued that these developments would be the precursors to a major recession, and perhaps a depression.
As predicted, the collapsing values of bonds backed by subprime mortgages did indeed lead to a collapse of the entire mortgage market, a bank liquidity crisis, a credit crunch and a steep fall in consumer confidence. This was the first leg of the storm, but the full blown banking collapse and the deep recession are not yet manifest. The conventional wisdom holds that the bullet has been dodged.
The markets are buying this hypothesis. Tempted by the latest crop of economic data that seems to show expansion, U.S. stocks have moved sideways, and even climbed slowly. The U.S. dollar has risen from its lows, and the rate of bank failures appears to be under control. In short, with gold off almost twenty percent from its highs, it looks as if many investors have concluded that the worst of the storm has past, and have decided look for good deals amid the stock market wreckage. Proceed with caution.
At its core, our economy is simply showing the effects of a national depletion of wealth caused by decades of consuming more than we produce and spending more than we earn. The natural corrective mechanism to such a condition is a recession. But recession is very bad for politics, especially in an election year. So, the potential corrective recession has been postponed by a massive injection of billions of dollars into the economy. At a time when we needed serious physical therapy, the government instead offered four massive pain killers:
First, the debased U.S. dollar has boosted exports and helped the GDP to remain positive.
Second, by setting interest rates below the rate of inflation the Federal Reserve discouraged savings and encouraged borrowing and spending.
Third, massive government lending kept the financial service industry solvent and the mortgage lenders operating.
Fourth, stimulus checks have kept American's spending money that they have not earned.
Although these government palliatives have succeeded in calming the immediate crisis (by saddling American taxpayers with massive liabilities), they have not cured the disease. If anything the huge doses indicate that the patient is getting far worse, even if in silence!
Last week, the FDIC announced that bank losses have tripled to $26.4 billion, leading to a fall of 86.5 percent in bank earnings. The Case-Shiller home price index shows American housing to have fallen in value by some 20 percent and still sliding. These massive movements have yet to be felt along the entire economic spectrum... but it is inevitable that they will be.
Don't be lulled into a false sense of security and start buying U.S. equities at seemingly knockdown prices. We are in the eye of the hurricane. Beware of the second leg!
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Beige Book full text
Prepared at the Federal Reserve Bank of Philadelphia and based on information collected on or before August 25, 2008. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.
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Reports from the twelve Federal Reserve Districts indicate that the pace of economic activity has been slow in most Districts. Many described business conditions as "weak," "soft," or "subdued." Cleveland and St. Louis reported some weakening since their last reports while Boston and New York noted signs of stabilization. Kansas City reported a slight improvement.
Consumer spending was reported to be slow in most Districts, with purchasing concentrated on necessary items and retrenchment in discretionary spending. Districts reporting on auto sales described them as falling or steady at low levels. Tourism activity was mixed but received support from international visitors in several Districts, and the demand for services eased in most Districts. The transportation industry was also adversely affected by rising fuel costs. Manufacturing activity declined in most Districts but improved somewhat in Minneapolis and Kansas City. Most Districts reported that residential real estate markets remained soft. Commercial real estate activity was slow in most Districts, and some reported further slackening in demand for office and retail space. Most Districts reported easing loan demand, especially for residential mortgages and consumer loans; lending to businesses was mixed. Districts reporting on the agricultural sector noted some relief from drought conditions. Districts reporting on energy and mining activity recorded increased activity.
Almost all Districts continued to report price pressures from elevated costs of energy, food, and other commodities, although some noted that there have been declines or slower increases in prices for several industrial commodities and energy products. Business contacts in a number of Districts indicated that they had increased selling prices in response to the high costs for their inputs. Wage pressures were characterized as moderate by most Districts amid a general pullback in hiring, although several Districts noted continued strong demand for workers in the energy sector.
Consumer Spending and Tourism
Consumer spending was slow in most Districts. Retail sales and other consumer spending was reported as mixed or little changed in Boston, Chicago, St. Louis, and Dallas and weak or declining in Philadelphia, Richmond, Minneapolis, and San Francisco. Sales were described as below expectations in Atlanta but on or close to plan in New York. Cleveland and Kansas City noted some improvement in retail sales since the last report. Several Districts reported that consumers were concentrating on food, staples, and other necessary items while reducing spending on discretionary items. Chicago, Dallas, and San Francisco reported noticeable declines in spending on apparel, electronics, and jewelry. Sales of furniture and household appliances were weak in most Districts. San Francisco described sales of this merchandise as exceptionally poor. A shift of consumer shopping patterns toward discount stores and lower-price brands and away from traditional department and specialty stores was observed in Philadelphia, Chicago, Dallas, and San Francisco. Sales of motor vehicles were reported to be weak or falling in all Districts, especially for larger, less fuel-efficient cars, SUVs, and trucks.
Tourism activity varied across Districts. Atlanta, Minneapolis, and Kansas City reported mixed or steady conditions since the last report. Boston, New York, and Richmond reported improvement since the last report. San Francisco reported that tourism was flat to down in most major destinations in that District, significantly so in Hawaii. International visitors boosted tourism in Boston, New York, and Minneapolis. In contrast, several Districts noted that domestic vacationers appeared to be reducing miles traveled and amounts spent on trips. Boston reported that business travel has been better than expected.
Nonfinancial Services
Districts reporting on nonfinancial services generally indicated some slowing in activity since the last report, although New York reported stabilization after several months of decline. Boston, Cleveland, Atlanta, and Dallas noted falling demand for freight and transportation services, and firms in those industries reported higher fuel costs negatively affecting their margins. Dallas reported that airlines were reducing capacity. Demand for information technology services was reported to be flat in Boston and down in St. Louis. St. Louis and San Francisco noted less strength in the health care sector since the last report. Business and professional services activity was weakening in St. Louis and San Francisco. Dallas reported that business was steady at accounting firms but down at legal firms. Temporary staffing activity was reported to be mixed in Boston and Richmond and stable in Dallas.
Manufacturing
Manufacturing activity was weak or declining in most Districts but improved in others. New York reported some stabilization after months of decline, Kansas City reported a rebound after a weakening in June, and Minneapolis and San Francisco have made gains since the last report. A number of Districts reported that export orders were bolstering manufacturing activity, but manufacturers in several of those Districts have noted some recent slowing in growth from this source. Boston, Philadelphia, Cleveland, Richmond, Chicago, and Dallas reported continuing declines in demand for housing-related products and construction materials. Boston reported declining output of aircraft and other transportation parts and equipment, but San Francisco reported a high rate of aircraft production. Output of motor vehicles and related products was falling in Boston, Cleveland, Atlanta, Chicago, and Dallas. Boston and San Francisco reported rising demand for information technology equipment, but Dallas reported some weakening in demand for high-technology products. Manufacturers in Philadelphia, Cleveland, and Kansas City have increased capital spending or plan to do so, but Boston reported that manufacturers in that District were reexamining capital spending plans, and Chicago reported that several firms were postponing capital projects.
Real Estate and Construction
Residential real estate conditions weakened or remained soft in all Districts, except Kansas City, which reported a modest increase in sales since the last report. Demand for housing was reported to be still moving down in Boston, New York, Chicago, St. Louis, and San Francisco. Residential real estate activity was sluggish in Philadelphia, Cleveland, Richmond, Atlanta, Minneapolis, and Dallas. New York reported low levels of single-family construction but a brisk pace of multi-family construction after an increase in permits in June occasioned by a change in the New York building code effective July 1. Chicago reported a faster rate of decline in residential construction since the last report as well as delays and cancellations in residential building projects. Richmond and Kansas City reported that lower and mid-price houses were selling at a better rate than more expensive houses. Atlanta and Dallas reported that inventories of unsold new houses were edging down.
Commercial real estate activity moved down or remained weak in all Districts except Dallas. Boston, New York, Philadelphia, Atlanta, and Chicago reported signs of softening demand for commercial real estate, including declining leasing activity, rising vacancies, and decreasing construction. Cleveland, Richmond, St. Louis, Minneapolis, Kansas City, and San Francisco reported that commercial real estate market conditions varied across those Districts but in general were not strong. Dallas reported an increase in office leasing but at a slower pace than in the last report. Chicago and Minneapolis noted drops in demand for retail space. Dallas and San Francisco reported that public projects were buoying construction activity.
Banking and Finance
District reports on bank lending generally indicated steady or slowing growth, with weakening demand for residential mortgages and consumer loans and near steady demand for commercial and industrial loans. Residential mortgage lending fell in New York and Richmond, remained slow in Chicago and Dallas, but gained slightly in Philadelphia. Consumer lending was flat to down in Cleveland, Atlanta, and St. Louis and showed little change in New York and Chicago. Commercial and industrial lending was near steady in New York, Philadelphia, and Cleveland and eased in Richmond, St. Louis, and Kansas City. Demand for commercial and industrial loans rose in Chicago--mostly from small and mid-size firms--and was described as solid in Dallas. San Francisco reported that overall loan demand has fallen since the previous report. All the Districts reporting on loan standards noted tightening. New York, Cleveland, Richmond, and San Francisco reported deterioration in credit quality. Dallas indicated that credit quality was holding up, although bankers in that District expected it to decline. Districts reporting on bank funding noted that competition for deposits remained strong. In Dallas, bankers said they were pursuing nondeposit sources of liquidity.
Agriculture and Natural Resources
The agricultural sector continued to struggle under drought conditions in the South, although there was some relief in July and August. In the Richmond District persistent dry conditions were expected to delay crop development and reduce yields; however, the fruit and vegetable harvests have been mostly completed. Atlanta reported some benefit from recent rains, although drought conditions persisted in Georgia. Chicago reported improved crop conditions, although corn and soybean development was behind schedule. Crop development was also behind schedule in the St. Louis District where conditions improved for grain but worsened for cotton. Minneapolis reported a better than expected harvest of winter wheat and expectations that corn production would exceed last year's harvest. Dallas reported dry conditions in much of the District and noted that Hurricane Dolly destroyed cotton and sorghum in the Rio Grande valley. Kansas City reported an increase in wheat yields. Although most Districts with significant agricultural sectors reported strong demand for their products, they also noted that fuel, feed, and fertilizer costs had risen, putting pressure on profit margins. High costs were reported for livestock operations, and Kansas City and Dallas reported that herds were being culled.
Energy and mining activity were strong and expanding in all of the Districts that reported on these sectors. Cleveland noted increases in oil, gas, and coal extraction since the last report. Minneapolis also reported an increase in energy activity and indicated that almost all mines in the District were operating at full capacity. Drilling activity has increased in the Kansas City District since the last report and was well above the year-ago level. Dallas reported a continued rise in the rig count, to levels above last year, with much of the increase due to drilling for natural gas. San Francisco noted an increase in petroleum production.
Prices and Wages
All Districts reported continuing upward price pressure from elevated input costs, although several noted recent retreats in some commodity and energy prices. Philadelphia reported rising prices for food products, industrial materials, and metals. Cleveland reported continuing increases in raw material costs, and business contacts in San Francisco said upward price pressure remained significant. Chicago, Minneapolis, and Dallas business contacts noted recent declines in commodity and energy prices but said price levels remained high. In Philadelphia, retailers reported rising wholesale costs. Retail price inflation edged up in Richmond. New York and Chicago reported little change in retail prices. Business contacts in Philadelphia, Atlanta, and Dallas indicated that high prices for their inputs were leading them to step up the pass-through of higher costs to their selling prices. Similar reports of the pass-through of costs to prices came from manufacturers in the Boston and New York Districts as well as from shippers in the Cleveland District. Chicago and San Francisco reported that the pass-through of costs to prices was more limited.
Labor market conditions were unchanged or somewhat softer in most Districts compared with the last report. Wage increases were typically characterized as moderate. Boston reported mostly modest wage increases except for greater hikes in salaries at information technology companies. Philadelphia reported moderate wage gains and limited hiring. Cleveland noted wage pressures in the energy sector but not in manufacturing or construction. Atlanta received scattered reports of wage increases, mainly in the professional services and the energy sectors, and more generally in coastal areas undergoing rebuilding after storm damage. Chicago indicated that labor markets have weakened and there was little wage pressure other than for a few skilled trades. Kansas City reported steady wage pressure but noted that there were shortages of qualified workers in the energy sector. Dallas also noted shortages of workers in the energy sector but indicated that wage pressure was mild overall. San Francisco reported some easing in upward wage pressure as firms in that District have been reducing staff counts, although demand remained strong for skilled workers in the resource extraction and information technology industries.