Radio Free Wall Street 3/12/2008

Lee Adler and Russ Winter talk about the recent machinations of the Fed including the new expanded Securities Lending Facility , and analyze the potential implications of this and other actions.

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4 comments for “Radio Free Wall Street 3/12/2008

  1. Mehul
    March 12, 2008 at 9:25 pm

    Russ & Lee,

    The game is not to generate a 200-300 bps spread. The “pixie dust” here is to allow the brokers to leverage up $200 billion in AAA/Aaa private label MBS priced at 60-90% of par. Then announce a federal government bailout = the AAA paper trades up to close to par => huge capital gain.

    You effect a massive transfer of wealth from the sellers of the securities to Wall Street.

  2. joe
    March 13, 2008 at 10:22 am

    A comment was made (by Russ Winter, I think) that the dealers could short treasuries in the futures market and be credited cash. In my understanding, the futures markets don’t work that way. First, there would be a margin requirement they would need to post. Then the settlement would happen day by day and they would only receive cash if the market moved in a favorable direction for them. Am I missing something?

  3. don
    March 13, 2008 at 12:34 pm

    If you haven’t already read this by B. Setser, I’d recommend doing so.

    http://www.rgemonitor.com/blog/setser/249279/

  4. Lee Adler
    March 13, 2008 at 3:14 pm

    Actually the Fed has cut reserves by $11 billion in the past two weeks including today’s OMO actions. So as usual the mainstream media has absolutely zero understanding of what is going on.

    I’ll have more details in the Wall Street Examiner Professional Edition Fed report to be posted shortly.

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