The real reason for the bailout rush.

[tannybogus]

In the last two weeks — if I am reading the Federal Reserves’ balance sheet data correctly — the Fed has:
<snip>
That works out to the provision of something like $370b of credit to the financial system in a two week period. That may be a bit too high: the outstanding stock of repos fell by $40b (from $126b to $ 86b), leaving a $330b net change in these line items. But that is still enormous.

The most that the IMF ever lent out to cash strapped emerging economies in a year?
$30b, in the four quarters through September 1998 (i.e. the peak of the 97-98 crisis).
<snip>
This is a very real crisis. The Fed’s balance tells a story of extraordinary stress. I never would have expected to see the Fed lend out these kinds of sums over such a short-period.
Factors Affecting Reserve Balances - H.4.1: http://www.federalreserve.gov/releases/h41/Current/
http://blogs.cfr.org/setser/2008/09/26/extraordinary-times/

Excellent and timely, Brad. I’ve been speculating all week that the pressure being used on the Congress to pass the Paulson Plan is the threat of Fed illiquidity. As of two weeks ago, the Fed had lent out more than $600 billion of its $800 billion balance sheet Treasuries against crap MBS collateral.
<snip>
The Fed is very close to being illiquid. That is the fear factor we are seeing at work, and the reason no one will discuss why the bailout is needed - only emphasise the urgency.
http://www.financialarmageddon.com/2008/09/brad-setser-ext.html

Is there no way to put some liquidity into the Fed without this huge bailout rush so that the bailout can be looked at in a more careful manner??:shrug:

[The Backlash Cometh]

1. If I could work on commission, I would love to be the one to repo Wall Street.

[malaise]

2. Rest assured that St Rudy of 9/11

has already lined himself up for that job.

[marmar]

4. I'll pay you......

I'd love to see my name on top of the former Citicorp headquarters.....

[Subdivisions]

3. I said yesterday that the Fed is broke. n/t

[The Backlash Cometh]

5. Well, let's repo the bull.

We can open up an executive cowboy-theme bar at Disney.

[bemildred]

6. "Pay no attention to the little man behind the screen!"

Our monetary system is "faith based", and unfortunately our econony has been "transformed" in that direction too. No amount of dicking around with the imaginary currency and the even more imaginary financial "instruments" based on what is essentially monetary masturbation will fix it. People have lost faith. They must be given something new to believe in. More "liquidity" from the Fed will not do the job.