Quote:
Originally Posted by lamboguy
James Turk just brought out a great point.
Lehman Brothers were over leveraged @ 48-1
Long Term Capital leveraged 105-1
both went bankrupt
Federal Reserve now leveraged 148-1.
bottom line, the Fed is headed towards insolvency and ultimately bankruptcy even when the economy gets going again some day.
|
Quote:
Originally Posted by Ocala Mike
How can the Fed go bankrupt when it has a printing press? The implications of what you are suggesting would be calamitous!
|
Interesting piece about who is actually running the show:
To put it bluntly, the Fed isn’t allowed to do any of this. The central bank is only allowed to purchase or lend against securities that have government guarantee. This includes Treasury securities, agency mortgage-backed securities and the debt issued by Fannie Mae and Freddie Mac. An argument can be made that can also include municipal securities, but nothing in the laundry list above.
So how can they do this? The Fed will finance a special purpose vehicle (SPV) for each acronym to conduct these operations. The Treasury, using the Exchange Stabilization Fund, will make an equity investment in each SPV and be in a “first loss” position. What does this mean? In essence, the Treasury, not the Fed, is buying all these securities and backstopping of loans; the Fed is acting as banker and providing financing. The Fed hired BlackRock Inc. to purchase these securities and handle the administration of the SPVs on behalf of the owner, the Treasury.
In other words, the federal government is nationalizing large swaths of the financial markets. The Fed is providing the money to do it. BlackRock will be doing the trades.
This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump.
https://finance.yahoo.com/news/feds-...110052807.html
