<?xml version="1.0" encoding="UTF-8"?><?xml-stylesheet title="XSL_formatting" type="text/xsl" href="/lib/css/styleRSSFeed.xsl"?><rss version="2.0" xmlns:ft="http://www.ft.com/FTRSSExtensions">
<channel>
	<title>Comments on: Concerted central bank action - SERIOUS ACTION!</title>
	<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/</link>
	<description>FT Alphaville from FT.com</description>
	<copyright>Copyright The Financial Times Ltd 2006. "Alphaville", "FT" and "Financial Times" are trademarks of the Financial Times.</copyright>
	<webMaster>help@ft.com</webMaster>
	<pubDate>Sat, 06 Sep 2008 06:21:56 +0000</pubDate>
	<lastBuildDate>Sat, 06 Sep 2008 06:21:56 +0000</lastBuildDate>
	<ttl>5</ttl>
	<language>en</language>

	<item>
		<title>by: sweden currency</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-15464</link>
		<pubDate>Wed, 19 Mar 2008 09:06:23 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-15464</guid>
					<description><![CDATA[<strong>sweden currency...</strong>

Good post. I am looking into these issues on my blog....]]></description>
				</item>
	<item>
		<title>by: fugger</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14652</link>
		<pubDate>Tue, 11 Mar 2008 21:10:45 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14652</guid>
					<description><![CDATA[Anonymous (17.22) has got this right.  The securities lending facility allows banks to swap illiquid securities for liquid securities (Treasuries) for a period.  They can then use the Treasuries as collateral to borrow cash in the repo market.  In the securities lending market, that is called the collateral upgrade trade - very popular in Europe at the moment but not in the US because securities lenders only take cash collateral there.  
Why is the Fed doing that rather than just lending more money via repo of illiquid securities?  The answer is balance sheet management.  The Fed cant make room for any more term lending on its balance sheet without selling Treasuries outright, which would cause unwelcome permanent changes to its asset portfolio.  It also cannot easily expand its balance sheet because it is not allowed by Congress to pay interest on bank reserve deposits (unlike the BoE and ECB). So while the Fed funds rate remains significantly above 0% banks will not want to hold higher reserves.
The underlying issue is the disappearance of the market for banks to borrow money beyond one week (excepting from people like the Federal Home Loan Banks) following the disappearance of the ABCP market and developments in the money fund sector (all the money has gone into ultra-safe funds).  So central banks are intermediating the flow of funds from the overnight market to 1-3 months.  
On the question of whether this is debasing the Fed balance sheet, the key thing is that these are repos with haircuts and daily margining.  So the Fed will only lose money if the counterparty fails and the securities default (the Fed can afford to hold until maturity).  Also worth bearing in mind that the ECB has always taken these securities in its repo operations and so the Fed is only moving to where the ECB has been since 1999.]]></description>
				</item>
	<item>
		<title>by: PC</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14647</link>
		<pubDate>Tue, 11 Mar 2008 18:37:55 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14647</guid>
					<description><![CDATA[Oh dear. I hope Ben and his chums have deep pockets. Does he realise what he's done? There are two answers to that question: both are profoundly disturbing. If the answer is yes, then that means that tying the fate of the T Bill to that of securitised assets is the lesser of two evils! If the answer is no, then the man is a fool, and is way out of his depth. Both are scary thoughts...

Anyone care to run a book on which billionaire financier, with an ego the size of a small galaxy, will end up with the epitaph "I broke the Fed in 2008".]]></description>
				</item>
	<item>
		<title>by: Anonymous</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14645</link>
		<pubDate>Tue, 11 Mar 2008 17:22:52 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14645</guid>
					<description><![CDATA[We risk confusing two senses of the word liquidity:  (1) Monetary base, and (2)  Provision of market-making services to ensure that asset markets remain well behaved and continuous.  The Fed has not been doing (1) so far since additions of short-term liquidity have been (partially) sterilised by smaller volumes of permanent repos and a reduction in other parts of the Fed's balance sheet.  But there is no question that the Fed has been adding liquidity in the second sense (2) by repoing securities which have become less liquid (mortgage backed securities) for ones which remain more liquid (US Treasuries)]]></description>
				</item>
	<item>
		<title>by: Paul Murphy</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14644</link>
		<pubDate>Tue, 11 Mar 2008 16:41:00 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14644</guid>
					<description><![CDATA[Don't like to butt in here. However, with all due respect to the other commentrrs, I'm intrigued by jck's thoughts. Especially given the debate earlier about how much real money the authorities are actually injecting.

http://ftalphaville.ft.com/blog/2008/03/07/11443/the-fed-rumour-recast/

What's the hypothesis? That this is a form of central bank public relations?

(CBPR - sounds like a business idea.)

And another question -- if equity players consider their first reaction to be wrong (when the footsie is up 150 points), how can it be "right" at  66 points at the close?? Surely these developments call for a binary response.

FWIW, companions as at delayed lunch today said:   "This is about Bear Stearns and their position as key prime broker to more US hedge funds than you could shake a stick at."]]></description>
				</item>
	<item>
		<title>by: bsb</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14643</link>
		<pubDate>Tue, 11 Mar 2008 16:16:47 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14643</guid>
					<description><![CDATA[bear stearns going thru the floor - maybe this move still doesnt help them?  are they still bankrupt as was the rumour yesterday?]]></description>
				</item>
	<item>
		<title>by: Ranger Turtle</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14642</link>
		<pubDate>Tue, 11 Mar 2008 16:03:25 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14642</guid>
					<description><![CDATA[Bernanke should keep trying to relieve the liquidity crisis in the way they announced today, BUT...

They need to STOP lowering rates, to fight inflation.

Food and gasoline prices will exacerbate the poor economy!]]></description>
				</item>
	<item>
		<title>by: bsb</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14641</link>
		<pubDate>Tue, 11 Mar 2008 15:55:23 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14641</guid>
					<description><![CDATA[check out this interesting blog post

http://www.interfluidity.com/posts/1204920896.shtml

the US banking system is very slowly being nationalised behind the scenes]]></description>
				</item>
	<item>
		<title>by: Peter Warren</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14640</link>
		<pubDate>Tue, 11 Mar 2008 15:45:00 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14640</guid>
					<description><![CDATA[(text missing from my comment) and any offers on 800, quite apart from the current "pure" bank solvency crisis and the $500 trillion derivatives debacle waiting in the wings.]]></description>
				</item>
	<item>
		<title>by: Peter Warren</title>
		<link>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14639</link>
		<pubDate>Tue, 11 Mar 2008 15:40:45 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/03/11/11506/concerted-central-bank-action/#comment-14639</guid>
					<description><![CDATA[bsb's 13.35 blog : you're spot on - They're scared out of their tiny little minds. If the S&P breaks 1370, the next stops are 1170 (weak), 1090 and ]]></description>
				</item>
</channel>
</rss>
