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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Real Man who wrote (92031)3/8/2008 8:28:34 AM
From: carranza2  Read Replies (2) of 110194
 
On further reflection, I think the so-called drain is an operation whose target is real estate. Mortgage rates have not fallen despite all the injected 'whatever' cash. The Fed just put that cash to work at the banks' balance sheets so that mortgage rates may indeed fall when the Fed cuts rates instead of going up as they have been doing.

Lots of re-fis on the way?

Having also increased the TAF to $100bn, the Fed can keep doing the so-called 'drain' over and over, taking in dodgy collateral, eventually issuing Treasuries for it until the crisis is over. Collateral fails, so what, the point is the bail out. MZM growth gets cut, everyone breathes a little easier, except Mr. Dollar, who keeps falling.

In other words, a devious sleight-of-hand bailout of the banks. Drain plus inreased TAF in exchange for Treasuries......damn, those folks are slick.

Perhaps time for me to take profits out of my ultrashort financial and real estate ETFs.
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