Fed USD swap lines outstanding increased $15.7 billion to $329.6 billion last week.
Not good! It’s only one week’s data, but the Fed doesn’t want to see this moving up.
They recently extended the lines from April to October, and likely realize there is no way
they can let the outstanding loans mature and demand payment without market disruptions that would make the rest of the financial crisis look like child’s play.
And if the rest of the world catches on to the notion that the Fed can’t call these loans without serious market disruptions, market forces will cause the lines to expand continuously and only stop when the Fed finally does call a halt either on their own or via Congressional order.
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