mbs

TIC in June 2018: The Questionable Collateral Aftermath of May 29

By |2018-08-17T17:34:53+00:00August 17th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There isn’t really any doubt what happened on May 29. It was a global collateral call. Bonds all over Earth were hugely bid, especially paper in Germany and America – the pristine of the pristine. This is pure liquidity risk, meaning that no matter your feelings on the long-term solvency of the US government (or [...]

Harvey and Irma Passed, Back To Same Procyclical Housing

By |2018-03-23T12:19:49+00:00March 23rd, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Why does monetary policy pay so much attention to housing? The easy answer over the last twelve years is the bubble. It was hard not to, though for a very long time policymakers did attempt a systemic disavowal. But beyond the middle 2000’s housing mania, central banks have had a very keen interest in real [...]

BOND ROUT!!!! (Now With Additional Exclamations)

By |2018-03-12T17:50:13+00:00March 12th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Ten years ago today, one of Carlyle Group’s mortgage funds, Carlyle Capital Corp (CCC), was seized by creditors. Precipitated by dwindling liquidity, the fund’s effective insolvency would amplify those global “dollar” pressures and lead to Bear Stearns’ untimely demise mere days later. The fund’s corporate parent issued a statement on March 6, 2008, that read: [...]

Rough End of a Collateral Century

By |2017-07-28T13:24:35+00:00July 28th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The entry of the United States into World War I placed a heavy financial burden on the government. The scale of such encumbrance was at the time almost unthinkable, and today is incomprehensible. Federal government expenditures in 1916 were all of $734 million, with $125 million financed by the new income tax authorized a few [...]

Describing ‘Reflation’

By |2017-01-11T17:43:14+00:00January 11th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Then-Federal Reserve Chairman Ben Bernanke testified before Congress on May 22, 2013, that taper was for officials a strong consideration. Though QE4, the UST portion of the restored balance sheet expansion, wasn’t yet six months old and he had promised, sort of, at the start of QE3 that both would be open-ended, sort of, his [...]

Repo On The African Plain

By |2016-11-22T17:48:37+00:00November 22nd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

That the repo market, as noted yesterday, has been beset by a persistent collateral shortage is relatively uncontroversial. Where once large blocks of MBS tranches were central to interbank flow and funding, their absence is still a fact of operation though that repudiation was a very long time ago. Even with that backdrop, however, it [...]

The Official Face of the ‘Rising Dollar’, Written Officially As Farce

By |2016-07-26T18:13:22+00:00July 26th, 2016|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Last July, the US Treasury Department finally issued its official report detailing its account of what happened on October 15, 2014. The statement was co-authored by staff at the Board of Governors of the Federal Reserve System, FRBNY, the SEC, and CFTC, as if the government were going overboard trying to prove its word the [...]

It Starts: Junk Bonds ‘Contained’

By |2016-02-01T18:31:02+00:00February 1st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

To an economist, the economy can bear no recession. In times of heavy central bank activity, an economy can never be in recession. Those appear to be the only dynamic factors that drive economic interpretation in the mainstream. And they become circular in the trap of just these kinds of circumstances – the economy looks [...]