Zhong Lu + 845 September 27, 2019 (edited) https://www.ft.com/content/71849166-e02d-11e9-b112-9624ec9edc59 Preferably in simple language. Credit to Zerohedge to pique my interest in this topic. As I see it: banks don't want to do repo. So repo needs to go to non-banks. So if non-banks can't do it, then Fed has to do it. But Fed can't do it too much because it'll screw up the Fed in other ways. Right? Also, Zerohedge is making noise about corporate debt. How big of a problem is it? Edited September 27, 2019 by Zhong Lu Quote Share this post Link to post Share on other sites
Tom Kirkman + 8,860 September 27, 2019 FT paywall... Quote Share this post Link to post Share on other sites
Zhong Lu + 845 September 27, 2019 (edited) Somehow I got through (am I somehow paying them and I forgot?). Let me try another. Here is Zerohedge's link: https://www.zerohedge.com/markets/repo-market-guru-whatever-changed-last-week-clearly-still-problem Edited September 27, 2019 by Zhong Lu Quote Share this post Link to post Share on other sites
Zhong Lu + 845 September 27, 2019 https://www.forbes.com/sites/caitlinlong/2019/09/25/the-real-story-of-the-repo-market-meltdown-and-what-it-means-for-bitcoin/#84353777caa2 Forbes. Quote Share this post Link to post Share on other sites
Zhong Lu + 845 September 27, 2019 (edited) Also, I'm telling you: money does grow on trees. How else would you explain where all this money is coming from? 250 billion or something mentioned in the Zerohedge article. From where? Edited September 27, 2019 by Zhong Lu Quote Share this post Link to post Share on other sites
El Nikko + 2,145 nb September 27, 2019 30 minutes ago, Zhong Lu said: Also, I'm telling you: money does grow on trees. How else would you explain where all this money is coming from? 250 billion or something mentioned in the Zerohedge article. From where? Quantative easing round 4? Quote Share this post Link to post Share on other sites
Ward Smith + 6,615 September 27, 2019 12 hours ago, Zhong Lu said: Also, I'm telling you: money does grow on trees. How else would you explain where all this money is coming from? 250 billion or something mentioned in the Zerohedge article. From where? Actually, as far as banks are concerned, money Does grow on trees. Here's a simplified scenario. You deposit $1000 with a bank for a CD term of two years. As far as the bank is concerned that's Their money, not yours for those two years. You've heard of Basel III right? That determines how out of whack a bank gets to be on their capitalization ratio. In English that means the bank Only gets to borrow $20,000 because they've got your $1000 for two years as an "asset". They take $1000 they borrowed and buy Treasuries (this covers their ass), the other $19k they spend how they like, loaning to other institutions, credit card customers, you name it. You guessed it, they don't Really need to buy that Treasury Bill, they just need to "borrow" it for the 2year term. Rehypothecated. There's more, but I've got to run for a bit 1 Quote Share this post Link to post Share on other sites
Ward Smith + 6,615 September 27, 2019 One of the Links referenced in the article, great background What is a Repo and how does it work? Quote Share this post Link to post Share on other sites