Re: Bernanke missing the point on repo

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(email exchange)

The Fed already has thousands of designated agents, the banks, to lend and take in deposits.

If I were in charge I’d eliminate the cap on FDIC insured bank deposits and legislate any insured pension funds keep their excess cash in insured deposits.

And borrowers can go to the banks as well.

And if I wanted spreads narrower that could also be done via adjusting capital requirements and risk weights as desired.

>   
>   On Tue, Mar 10, 2009 at 10:00 AM, Pat wrote:
>   
>   Bernanke is lending credence to our idea of a centralized, regulated exchange for repo which
>   we have been calling the RPX project.
>   

Chairman Ben S. Bernanke — At the Council on Foreign Relations, Washington, D.C.

Mar 10 (Federal Reserve) — The Federal Reserve and other authorities also are focusing on enhancing the resilience of the triparty repurchase agreement (repo) market, in which the primary dealers and other major banks and broker-dealers obtain very large amounts of secured financing from money market mutual funds and other short-term, risk-averse sources of funding.


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EU Finance Chiefs Rebuff US Calls to Boost Economic Stimulus

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Yes!

Europe Snubs US Calls for More Stimulus Before G-20

by Jennifer Ryan and Agnes Lovasz

Mar 10 (Bloomberg) — European finance ministers rejected calls from the U.S. to do more to battle the economic crisis, saying stimulus plans already in place need time to work.

“Recent American appeals insisting that the Europeans make an additional budgetary effort to combat the effects of the crisis were not to our liking,” Luxembourg Finance Minister Jean-Claude Juncker said yesterday after leading a meeting of euro-area finance chiefs in Brussels. “We want to see what the effect of the recovery package is going to be.”


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Iraq and Iran holding hands

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Well done- we facilitated the realization of the dream of the Iraq-Iran Shiite super state Saddam had been keeping apart.

Iraqi president meets top Iranian leaders

Feb 28 (AFP) — Iraqi President Jalal Talabani is meeting top Iranian leaders on Friday on his second trip to the Islamic republic in almost two years, the offical IRAN news agency reported.

Talabani, a Kurd, will hold talks with his Iranian counterpart, Mahmoud Ahmadinejad, the head of Iran’s Expediency Council Akbar Hashemi Rafsanjani and others.

Other media reports said Talabani is also expected to meet Iran’s supreme leader Ayatollah Ali Khamenei.

The Iraqi leader arrived in Iran on Thursday on his way home from a trip to South Korea. He is accompanied by a high-level delegation from the ministries of foreign affairs, trade and electricity.

He previously visited Iran in June 2007.

Ahmadinejad travelled to Iraq in March 2008 in the first ever visit by an Iranian president to the former arch-foe, symbolizing the flourishing ties between Tehran and the Shiite-led government in Baghdad.

The two Shiite-majority countries fought a war between 1980 and 1988 in which around one million people died.

Relations have warmed considerably since the 2003 overthrow of Saddam Hussein’s Sunni-dominated regime in Iraq by US-led forces.

Iraqi Prime Minister Nuri al-Maliki visited Tehran in January to seek Iran’s help in rebuilding the country and the two neighbours agreed to establish a high-ranking joint committee to improve cooperation.


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2009-03-10 USER

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ICSC UBS Store Sales YoY (Mar 10)

Survey n/a
Actual -0.9%
Prior -0.8%
Revised n/a

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ICSC UBS Store Sales WoW (Mar 10)

Survey n/a
Actual 0.2%
Prior -0.6%
Revised n/a

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Redbook Store Sales Weekly YoY (Mar 10)

Survey n/a
Actual -1.4%
Prior -1.9%
Revised n/a

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Redbook Store Sales MoM (Mar 10)

Survey n/a
Actual -0.2%
Prior 0.8%
Revised n/a

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ICSC UBS Redbook Comparison TABLE (Mar 10)

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Wholesale Inventories MoM (Jan)

Survey -1.0%
Actual -0.7%
Prior -1.4%
Revised -1.5%

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Wholesale Inventories YoY (Jan)

Survey n/a
Actual 1.0%
Prior 3.4%
Revised n/a

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Wholesale Inventories ALLX 1 (Jan)

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Wholesale Inventories ALLX 2 (Jan)

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IBD TIPP Economic Optimism (Mar)

Survey 43.0
Actual 45.3
Prior 44.6
Revised n/a


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Bernanke to ‘deploy all tools’ except the right ones

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The right tools have yet to be deployed:

  1. Lending to member banks on an unsecured basis (demanding collateral is redundant).
     
  2. Providing banks with term financing at rates set by the FOMC (mortgage rates, etc. can be directly set as desired).
     
  3. Prohibiting bank sales of financial assets (buy and hold only and no interbank markets).
     

Instead we have the results of a government that doesn’t understand its own monetary arrangements and has implemented policy that for the most part has made a difficult situation all the more difficult.

Feel free to distribute for comment!

Bernanke Says Fed to ‘Deploy All Tools’ for Economic Revival

by Steve Matthews

March 7 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said the central bank will “forcefully” use every resource to restore financial-market stability and revive U.S. economic growth.

“We will continue to forcefully deploy all the tools at our disposal as long as necessary to support the restoration of financial stability and the resumption of healthy economic growth,” Bernanke said in prepared remarks for an event today in Dillon, South Carolina. The Fed chief returned to his hometown to attend a ceremony naming a highway interchange after him.

Bernanke didn’t comment on specific Fed policies in his remarks. He said he was aware Dillon now “faces challenges” with the economy in a recession.


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Summers on stimulus

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World Coordinated Stimulus Needed: White House

Mar 9 (Reuters)

NOT!!!

We are much better of doing it all unilaterally.

This is the cost of having leadership that does not understand our monetary system.

Summer’s comments, ahead of next month’s G20 summit in London, suggest the U.S. administration wants all industrialised nations to pull together to engineer a demand-led recovery.

That will be music to the ears of British Prime Minister Gordon Brown who has trumpeted internationally-coordinated stimulus measures as the best way to tackle the downturn.

Him too.

“The right macro-economic focus for the G20 is on global demand and the world needs more global demand,” said Summers.

Yes, but we are better off if the demand is here and they export to us.

Summers, who served as Treasury secretary under the Clinton administration in the 1980s, said the view that the market was inherently self-stabilising had been dealt a “fatal blow.”

“This notion that the economy is self-stabilising is usually right but it is wrong a few times a century. And this is one of those times,” he said.

No, it is self correcting, but the ugly way as the automatic stabilizers increase the deficit via falling revenue and rising transfer payments until the deficit gets large enough to turn it all around.


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OPEC February Crude Output Down 770,000 Bbl/Day to 27.775 Million

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The Saudis are back to being swing producer as they set price and let output adjust.

World inventories are estimated to be falling by over 1.4 million barrels per day, as confirmed by the contango quickly fading to backwardation as we pass the ‘roll period’ for the passive funds.

With demand holding up better than markets anticipated and world non OPEC supply stagnant as well, I would expect demand for Saudi output to rise even as they keep prices firm.

I also expect the Fed to see this as a threat to growth rather than inflationary, and therefore continue to keep rates low.

OPEC February Crude Output down 770,000 Bdl/Day to 27.775 Mln

Mar 5 (Bloomberg) — Crude-oil production from the 12 OPEC members in February declined 770,000 barrels a day from January, the latest Bloomberg survey of producers, oil companies and industry analysts shows. Figures are in the thousands of barrels a day.

Opec Production
February 2009

Opec Country Feb Est. Jan Monthly Output Feb. 1 Change Est. vs. Target* Est. Target Est. Cap. (@)
Algeria 1,245 1,275 –30 1,203 42 1,450
Angola 1,670 1,740 -70 1,517 153 2,000
Ecuador 445 475 -30 434 11 500
Iran 3,690 3,780r -90 3,336 354 4,100
Iraq* 2,385 2,365 20 – – 2,500
Kuwait# 2,140 2,280 -140 2,222 -82 2,650
Libya 1,605 1,630r -25 1,469 136 1,800
Nigeria 1,765 1,810 -45 1,673 92 2,500
Qatar 695 725 -30 731 -36 900
Saudi Arabia# 7,860 8,025 -165 8,051 -191 10,800
U.A.E 2,210 2,290 -80 2,223 79 2,800
Venezuela 2,065 2,150 -85 1,986 79 2,500
Total OPEC-12 27,775 28,545r -770 — — 34,500
Total OPEC-11* 25,390 26,180r -790 24,845 545 32,000

*Quotas effective Jan. 1, 2009. OPEC agreed at its Dec. 17 meeting in Algeria to cut its quota target by 2.463 million barrels a day from the previous level, to 24.845 million barrels daily from Jan. 1. The quota target excludes Iraq, which has no formal quota. Indonesia left OPEC at end-2008.

Totals rounded.

r = revised @ = Capacity attainable within 30 days and sustainable for 90 days. # Includes Neutral Zone production shared equally between Saudi Arabia & Kuwait.


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China News Highlights

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Looks like they are showing signs of having bottomed as well, and continue to push demand with fiscal adjustments to sustain employment?

The post Olympic lull also contributed to the Great Mike Master’s Inventory liquidation which seems to have run its course by late December.

Highlights

China Textile Industry Lobbies for Higher Export Rebates, Loans
Standard Chartered says China’s stimulus spending could top 5 tr
Yi Says Chinas Rapid Loan Growth Is Positive ‘Overall’
China First-Quarter GDP to Rise 6.5%, CPI to Drop, Journal Says
China Has Little Room to Cut Rates, Central Bank’s Yi Says
China Unlikely to Maintain Rapid Loans-Growth Pace, Wu Says
China predicted to become world’s No 2 economy by 2010
China has room to further cut interest rates


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