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Fed Fires First 1st $1-Trillion Shot Into Mega-Liquidity Crisis

amid the collapsing stock market (3 years growth since Trump's election 100% wiped out in 3 weeks) :

Liquidity the ability of major WS banks to lend money to each other in order to cover, facilitate all other banking-credit transactions is going to freeze the credit market.

i.e. your bank accounts, credit card, all your electronic financial assets LOCKED up.

This is why the Fed has been performing "emergency" (<--translation: Regular) overnight repo loans to the WS banks. To keep them liquid, and able to loan cash to cover the whole economy's everyday financial transactions.

Major WS banks, particularly in the past 2 years, have been extremely reluctant to lend to each other which led to the summer 2019 (which have now become regular/weekly) overnight repo injections of the Fed.

Now, with the collapse of the stock market, the liquidity crisis has become far more critical. Hence the Fed announcements this past week of further "emergency" (remember the August-September 2019 "emergencies"?) measures.
See Also

Federal Reserve: "Current Monetary Policy Will Likely Remain Appropriate"=NEW WORLD ORDER

Repo Madness Clown Show: Fed Discusses Loaning Directly to Hedge Funds For Bailouts

Repo And The Man: A Half-Trillion Later

The Federal Reserve Has A Repo Problem. What's That?

Sen. Warren Grills Treasury Secretary Mnuchin On Federal Reserve Repo / Overnight Lending

TRUMP [to Federal Reserve]: More Easy Money Please... IN YOUR FACE.

Federal Reserve Cuts Interest Rates For Third Time In 2019

US Federal Reserve Starts "Quantitative Easing Forever"

Obama And Trump: The Two Best Friends The Fed Has Ever Had

Debt Saturation Meltdown Global Economy In Free Fall 05.Mar.2020 18:12

Inverted Yield Curves Signal Total Failure of Dominant Mainstream Macroeconomics

(Financialization documentary) The Money Deluge

The Disaster Of Negative Interest Rates

Fiat currency debt-based economic system has now replaced 'capitalism'

IMF: Global economy, financial system on brink of disaster

IMF and World Bank Heads Debate Growing Debt Problems

The way out for a world economy hooked on debt? More debt

Debt-based economic model: Can the US dominate the global financial system forever?

RE: Wall Street banks reluctant to lend to each other 16.Mar.2020 18:40


This has been pointed out and closely followed/investigated by several financial experts and observers...

it is believed that, one of the reasons the giant largest banks are not loaning to each other in recent months/years (since at least 2018 and earlier) is that, they are playing Derivative games with huge sections of their assets.

i.e. their primary assets are tied up in casino mathematical derivative shenanigans, and are not being used (as they have been traditionally) to facilitate the every day transactions of the broader economy, businesses, regional banks, all consumer transactions etc.

and, in a related process to the derivative assets, the WS banks are also cross-trading between their own pools (aka Dark Pools) of assets to artificially inflate or depress stock prices :

not only do we have a 'fake' overvalued stock market, a fake fiat dollar, the Federal Reserve since summer 2019 in massive overnight repo billions-$$$ per week (and now--> Trillions-$$$ this week) bailouts to the WS banks and "don't call those Quantitative Easing"..... We also have the biggest banks with the majority of their assets tied in hard to derivative casino games and also trading each other's stock in Dark Pools which are deliberately intended to manipulate stock prices (which now unfortunately for the WS-bank wizards are in free fall).

Fed Rolls Out $1 Trillion Punch Bowl To An Empty Party 16.Mar.2020 18:52


The Fed Tried to Give Away $1 Trillion to Wall Street Today and Failed, Suggesting Specific Banks Are In Trouble

By Pam Martens and Russ Martens: March 16, 2020 ~

What is the world coming to when the New York Fed can't mix up $1 trillion of almost-free money in its punch bowl and get the mega Wall Street banks to drink freely?

The New York Fed handed out $129.60 billion this morning at an average interest rate of 0.112. That was for a one-day loan to one or more of Wall Street's trading firms. The specific names of which firms are doing the borrowing are a closely-guarded secret at the Fed - just as they were during the financial crisis in 2008 until media lawsuits and a legislative amendment forced the banks' names out into the open. All that the public is allowed to know today is that any of the Fed's 24 primary dealers (Wall Street trading houses) are allowed to borrow from the facility. (See list below.)

The New York Fed also offered $500 billion in a 28-day loan this morning and, stunningly, it only had offers for $18.45 billion of the $500 billion, which was loaned at an average interest rate of 0.151 percent.

Despite that poor showing at its money spigot party this morning, the New York Fed made a surprise announcement and said it was throwing another money giveaway of $500 billion at 1:30 p.m. today. Again, only takers for $19.40 billion of the $500 billion showed up. The loans were made at the incredibly low average interest rate of 0.102 percent.

There was this same lack of demand last Thursday and Friday when the Fed tried to give away, almost for free, $1.5 trillion over the two-day span.

What could possibly account for this lack of greed from the typical pigs at the trough?

The reason that jumps to mind to anyone who has been following the Fed's money spigot closely, is that there are only a handful of Wall Street banks that are in desperate need of this cash. Since the beginning of this program last fall, the New York Fed has imposed caps on how much any one of the 24 Wall Street firms could borrow at each offering. It refers to this limit as a "proposition."

So, for example, on the lastest $500 billion loans, firms can make a "proposition" up to $20 billion on loans backed by U.S. Treasury collateral and up to $20 billion on loans backed by government-backed mortgage securities. It's not clear if the Fed would provide an individual bank with a total of $40 billion on that specific loan or just $20 billion for both propositions.

It's also not clear if the Fed has, without the public's knowledge, imposed an overall cap on how much any one bank can borrow within a specific period of time.

But what today's unscheduled afternoon loan operation suggests is that a bank that borrowed last Thursday or Friday or this morning, may have been in need of more assistance this afternoon.

We looked at how the Fed's primary dealers were trading today to see which banks were showing the most distress. At approximately 2:30 today, these banks were showing large percentage declines on the day: Citigroup was down a scary 18.24 percent; Morgan Stanley was down 14.35 percent; Bank of America was down 14.38 percent; and JPMorgan Chase was down 13.64 percent.

Deutsche Bank had earlier in the day traded at a new all-time low of $4.99 before bouncing back to $5.39 for a percentage decline of 9.67 percent. That leaves the bank with just $11.5 billion in common equity capital versus tens of trillions of dollars (notional) in derivatives exposure.

Federal Reserve's 24 Primary Dealers as of October 7, 2019 (Source -- Federal Reserve Bank of New York)

Federal Reserve's 24 Primary Dealers (Source: Federal Reserve Bank of New York)

the Fed's 24 primary dealers
the Fed's 24 primary dealers

Oil below $30/bbl, demand predicted to fall by 10M bbl/day 16.Mar.2020 19:17


this oil price war and plunge in prices will definitely drag the stock market down with it. Oil price keeps the dollar solvent and valued as world reserve currency. ( And by extension, the Fed's plans to keep printing fiat debt bond-sale based dollars )

At the moment it is unclear what Russia vs Saudi Arabia's respective goals are but appears (beyond merely driving their oil competitors into bankruptcy and thus shoring up prices) to be a high stakes game of chicken, with global banks that have outstanding loans to deeply indebted energy companies causing a broadening credit crisis... compounding the overall banking-finance industry lack of liquidity which threatens business and consumer credit.

More here :

5 of the largest WS banks hold $230 trillion in Derivatives 16.Mar.2020 19:31



As of September 30, the latest data available from the Office of the Comptroller of the Currency, five of the Wall Street banks held $230 trillion in notional (face amount) of derivatives, which represents 85 percent of all derivatives held by the more than 5,000 banks and savings associations in the United States. Banks that get on the wrong side of a derivatives trade have to regularly post extra collateral to their counterparty. The Fed's bizarre action in removing reserve requirements at a time when public confidence in the banks is critical, raises concerns across Wall Street that at least some of these banks may desperately need access to those reserves to post collateral on derivative trades.


Related :

post-1980s-Reagan-Thatcher Financialization has replaced 'capitalism'
total debt levels and deficit spending of the past 30 years has eclipsed that of the past few centuries of Western civilization; while central banks, led by the U.S. dollar-based Federal Reserve continue to issue debt note fiat currency which perpetuates an utterly 100% fake global 'economy'.

N.B. the ^ sections on *Financial turnover compared to gross domestic product (GDP), and *Futures markets