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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (25540)	9/12/1999 7:56:00 PM
From: RWS	Read Replies (1) \| Respond to of 99985

Heinz: Re: the discussion on liquidity, more or less. I found this paragraph from urbansurvival.com pretty interesting: >i<Hiding Liquidity: The Federal Reserve has been very sneaky about providing massive new liquidity for the markets as we get ready for the Y2K non-event. The way they have gone about it is this. Member banks usually have to put up only their best paper to get at federal funds (at the repo rate). Now, with a splash of regulatory ink, it is suddenly possible for member banks to put up other paper, cheap paper, less reliable paper, like securitized mortgages and such, to borrow cash at bargain basement rates at the Fed window. Second rate paper can be traded in for cash to play the market. Where do we get in line, huh? But do you hear much about this in the mainstream press? Naw. Who gets it, and besides, I was a journalist for 13 years: Where's the story, right? Do not forget when you are blowing off Bill's Blow Off Scenario or Dhruv's pending "meltup" call that the Fed has a basket of $50 billion (and more) standing by to flood the markets with cash should it be needed for Y2K. Cheap paper all you have? Collections of mortgages? Bring to the Fed Window! Let's boogie! So that makes the case for excess liquidity, right? Any comments? RWS