Take a peek at these two charts released from the FED today and tell me what you see.

so do we get all our money out now? will we lose it all? what about IRA's???

Dumbass. Yeah they'll blast my ass. However I am good for at least half a dozen, fool. If every man could do that, I guess TPTB would have a major problem, eh fool?????

so do we get all our money out now? will we lose it all? what about IRA's???


You dont have any money. You have credits. Look up the definition of money and you will find that what passes today as money isnt actually money at all. Its difficult today to find anything that you can actually buy that appreciates in value.

SAY WHAT??? The major banks are running their day to day operations via the Fed discount window-ie FED CREDIT. Sure looks like insolvency to me.

Buttmuncher.

SAY WHAT??? The major banks are running their day to day operations via the Fed discount window-ie FED CREDIT. Sure looks like insolvency to me.

Buttmuncher.


sounds like you are a quack. The chart in no way says that the "banks are running their day to day operations via the Fed discount window-ie FED CREDIT".

It says they are borrowing relatively small amounts of money to cover write off losses from the mortgage crisis, and even that is much is reading in details the chart doesn't provide.

The banks are being protected from losses. The Fed is exchanging dubious mortgage bundles for cash, cash they can print in any volume.

You have a legitimate bitch, but you don't have any reason to assume insolvency. Not by a looooong shot.

Take a peek at these two charts and tell me what you see.

1)
[link to finance.yahoo.com]

2)
[link to finance.yahoo.com]


It's all over but the crying folks. The dumb bears are toast, yet again. Back to vegetable gardens for them.

so do we get all our money out now? will we lose it all? what about IRA's???

So? Pay off debts, credit cards and mortgages and put your money in your mattress while you can still get it out of banks?

.. thanks for the find Omega. I just had to go generate that graph myself. Too bad it most certainly is *NOT* a error in the data!

The Gulags are ready.. what you seeing Omega? October, September or November 'till complete meltdown? Earlier? Later?(I keep seeing October '08 for some reason.. and that since spring of last year)

Dumbass. Yeah they'll blast my ass. However I am good for at least half a dozen, fool. If every man could do that, I guess TPTB would have a major problem, eh fool?????




You nailed it there! This is the attitude that every able bodied man will have to adopt....Otherwise.......Game over man!

We're trying to buy a home right now since the prices are good. But it's not looking good for getting a loan, and we have excellent credit. I mean loans are there from the banks, but the terms make for huge monthly payments, so there's no way we'd buy on those terms.
It will be interesting to see how this plays out. Despite the fact that it's a good time to buy, if people can't get decent loans that's not going to do anybody any good.

.. thanks for the find Omega. I just had to go generate that graph myself. Too bad it most certainly is *NOT* a error in the data!

The Gulags are ready.. what you seeing Omega? October, September or November 'till complete meltdown? Earlier? Later?(I keep seeing October '08 for some reason.. and that since spring of last year)

You actually think this moron has some insight into the future that everyone else lacks? Omega couldn't predict his fat ass out of a paper bag. He is neither wise, talented, or insightful. He's a fat ass loser that posts bullshit articles and attacks those that disagree with him. It's amazing how many of you gravitate towards a no talent assclown such as omega.

So? Pay off debts, credit cards and mortgages and put your money in your mattress while you can still get it out of banks?

Oh, if you're wondering how our bank's "reserves" are, have a peek.

Hint: Sit down first, and click for a big version. You won't need your reading glasses, in fact, I might suggest getting drunk to blunt the impact.....



Note that this chart was "redacted" a few months ago, and a few Tickerforum participants, including Pika-Steph, complained. I hear rumblings that a few FOIAs might have even been launched. Voila - the truth reappears!

Betcha they're hoping nobody notices.

Oops - a few of us did.

I know, I know, that "doesn't matter".

Uh huh. Oook. Everything is going swimmingly when our banks are borrowing from The Fed to pay salaries and the light bill, not to mention covering your ATM withdrawal, because all the reserves that usually are there behind their loan book has "taken flight" and gone home (or was that "we lost all the money speculating in the housing bubble on silly things like CDOs?" Hmmmm...)

Now let's talk about this a bit, because The Fed has released some Orwellian Speak attempting to cover up reality. Here are the money quotes:
"The H.3 statistical release indicates that nonborrowed reserves of depository institutions have declined substantially since mid-December to a level that is now negative. This development reflects the provision of a large volume of reserves through the Term Auction Facility (TAF) and has no adverse implications for the availability of reserves to the banking system."
That statement is true but does not bear on the question.

Here's the other one:
"To maintain a level of total reserves consistent with the Federal Open Market Committee's target federal funds rate, increases in borrowed reserves must generally be met by a commensurate decrease in nonborrowed reserves, which is accomplished through a reduction in the Federal Reserve's holdings of securities and other assets. The negative level of nonborrowed reserves is an arithmetic result of the fact that TAF borrowings are larger than total reserves."
Now there's the money quote, but you have to read and understand it.

Let's talk about the purpose of all of this stuff.

Fed Credit, in general, is all about balancing out the system. Or at least, its supposed to be.

Let's say you borrow $1,000 from Bank A and spend it at a merchant. That merchant banks with Bank B. Bank A is now short $1,000 in cash form his drawer and is supposed to hold reserves equal to 10% (for example) of the loans he has outstanding.

He needs that $1,000 but Bank B has it. He therefore goes to The Fed and gets it in the form of "borrowed reserves".

But note that Bank B has an extra $1,000 in "non-borrowed" reserves, because the merchant deposited your $1,000 over there!

So the net impact of this balancing act on the system is zero. This is why, if you look at that chart, you will see that the non-borrowed reserves has risen generally over time as has the size of the banking system, and while it has declined from time to time in recessions when economic activity slows it tends to rise, because the velocity of money slows down and debt tends to be repaid (or defaulted.)

So what happened this time?

That "balancing mechanism" has been thrown completely out the window, and The Fed has instead taken to propping up insolvent institutions!

Let me explain.

You borrow $1,000 from Bank A. But instead of spending it at a merchant who deposits it in Bank B, you lose some of it. In other words, the money is literally vaporized (e.g. debt defaults, ala a CDO that explodes and the margin call cannot be met.)

Bank B never sees the money but Bank A is still out the $1,000. Now there's a problem, because when Bank A goes and taps the Fed credit facility there is no corresponding offset in the system.

Now what Bank "A" is supposed to do in this circumstance is go sell an asset (either something they hold or additional equity, e.g. common or preferred stock) so they get the cash. This shrinks their balance sheet and leverage, and restores the balance. If they get too far underwater doing this, then they go down and the FDIC steps in.

But the TAF has stopped that, and instead, the bank is now taking their alleged "assets" to the TAF window and getting a loan. That's a problem, because loans have to be paid back and reserves are supposed to be liquid - either in actual cash or treasuries that can be turned into cash on an immediate basis. See, I might come in and want my deposited money tomorrow, and the bank has to be able to give it to me!

If that "reserve" is actually borrowed money (from the TAF) then with what does the bank repay The Fed when that loan comes due?

They no longer have the money!

The Fed has gone from being a balancing (liquidity) mechanism to being a funding (equity) mechanism, and what's worse, the collateral they are holding may not be worth the amount of loan they have outstanding.

That is, the system as a whole is insolvent, in that it fails the essential test of having the amount of reserves in liquid assets as mandated by law.

What's worse, since the H.3 report says that the amount of "required reserves" is $40 billion or so, and the non-borrowed reserves is more than double that amount the system is not only insolvent (that is, has non-borrowed equal to the required amount) but in fact is negative by double the amount required.

What does this mean? It means that in aggregate the banking system is broke.

The system in aggregate has a negative net value by about $60 billion.

This does not mean that there are not solvent banks. There are lots of them.

But there are also lots of insolvent banks and Bernanke and The Fed are intentionally concealing this in violation of at least the spirit of FDIC and other banking system regulations, in that those regulations require that insolvent institutions must be resolved in a manner that is the least disruptive to the system. Either those banks must de-leverage through asset sales or equity raising to get their required reserve numbers where they should be, or they should be seized and folded into solvent institutions.

Attempting to prop up failed institutions is inherently in violation of this requirement because it places the system at risk of even larger damage, and the scope of this potential damage has continually increased since January, as the increasing amount of "non-borrowed" reserves shows!

It further makes Bernanke and the rest of The Fed folk out to be raw liars.

They are not providing mere liquidity (balancing of reserves) to the system as they claim; the H.3 release and the above graph (depicting the H.3 release in graphic form) prove that in fact they are now supporting these banks instead.

But where did that support come from?

It came from The Treasury, in that The Fed's balance sheet is ultimately funded by the Treasury's sale of bills and bonds, which The Fed literally prints money to buy.

The taxpayer is in fact paying the light bills, salaries and bonuses of insolvent banks and we are not being told about it!

Still think your money is safe eh?