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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (346716)	10/29/2007 9:05:03 AM
From: NucTrader	Read Replies (3) \| Respond to of 436258

Actually I can see SPX 1542-1543 a (potential) top. Maybe you can add me to the Westie, PS signal group. BTW. THis post was interesting. Don't really know how accurate it is? "Up front: Thanks to Pat over on the forum for the "heads up" on this one. This is only half-way into the tinfoil range. Last week some $75 million of "fed funds" (that is, interbank overnight credit) was transacted at a rate of 15%, and "a bunch" went through in the low to mid 7s. No, I didn't mistype that. You can find the actual data at this link. Originally I, and everyone else, assumed that the "high" was an error. A bad print. That there was no chance this was "real". It was. Yes, "EFF" (effective fedfunds) was right where "it should be" according to The Fed - across all transactions. Now let's think about this one for a minute here folks. "Someone" transacted a $75 million overnight loan that they needed to meet reserve requirements at an absolutely outrageous interest rate - about what you pay for credit card money. A bunch of "someone else's" transacted a bunch at 7-7.5%. They had the discount window available to them at 50 bips of penalty to EFF, which is a direct overnight loan from The Fed, but didn't use it. Are you going to try to tell me that some banks actually paid nearly 10% more as an interest rate than they had to? On what planet are we having this discussion? There is only one possible explanation for this particular behavior - The Fed would not take the alleged "collateral" these institutions tried to put up, and the market didn't think it was worth much either, even on an overnight basis, and as such "the market" priced the interest rate similar to how Guido would for your "short-term" loan! This raises the spectre of something truly terrifying in the credit markets - The Fed may be inches away from losing control over the FF Rate entirely!" Here's the link... newyorkfed.org