SPDR S&P 500 (SPY)

[Two-timer]

OT: Is the Fed smart or stupid? Denninger answers that question. Two

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On Monday the Federal Reserve held a major reverse repo test, as was announced by the NY Fed and by Zero Hedge. We have subsequently received several unconfirmed reports that the conducted test has been a disaster (we have calls into the Federal Reserve to confirm or deny this, we are eagerly awaiting their reply).

How do you do a reverse repo when there's no cash to tender?

Bottom line: JP Morgan/Chase appears to have only $21 billion in actual cash. Their "Cash" position as stated on Yahoo Finance and other places includes deposits with banks and fed funds - that is, cash "equivalents" that are not actual money in their possession.

That, of course, doesn't count when The Fed wants to drain liquidity and needs to drain actual cash.

It also belies a bigger question - what is the true leverage ratio of JP Morgan/Chase, if their actual cash is only $21 billion? Oh, that's kind of an ugly question, especially with some $700 billion in debt outstanding....

Are people really this dumb over at The Fed?

It appears so, and begs the question - how big of a disaster are we about to undergo?