Posted on July 6th, 2008 in Daily Stock Market / Economic News - The Real Story, Mr Mortgage's Personal Opinions/Research
On Tursday, after the market closed, the Fed released the Bear/JPM updated numbers at the same time as the TAF borrowing amounts. To every one’s surprise it was reported that:
“The Fed also said lending to securities dealers fell to zero for the first time since it began extending the credit in March, when Bear Stearns was taken over in a deal that was brokered by Washington officials.
The fact that no lending had recently occurred means that Wall Street is using the Fed only as an emergency backstop rather than as a continuing source of funding, Brian Stack, a senior economist at Macroeconomic Advisers LLC, told Bloomberg.“
I CALL BULL$^&#! Economists, stock pumpers and bubblevision always look at the simplest explanation and most positive reason for anomalous news and they are consistently wrong.
What about looking at it from a different perspective such as ‘the investment banks are running out of ‘investment grade assets’ to use as collateral’. Remember, there was a rumor floating around last week from credible sources that the Fed was going to HAVE to extend the TAF to 90-days. This fits in perfectly with the IB’s running out of collateral. In addition, the credit markets have gotten notably worse in the past 30-days meaning the demand for cash shrinking due to investment banks getting stronger is a pipe dream.
What do you think? -Best Mr Mortgage