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Failing US financial institutions must face the credible threat of government closure if reforms are to succeed, a key adviser to President Barack Obama said Tuesday.
Originally posted by Cabaret Voltaire
This thread has been so quiet.
But don't worry, the meltdown is coming back! It's coming!
You have to check out my thread over here and pray to Mithras for a major meltdown.
Originally posted by DangerDeath
Yes, you can still buy and sell, and make a living from it, but it's a wasted life.
Should I be worried? Or should I just not care and live my everyday life like I never saw anything?
I'm going to ask for forgiveness in advance here. I'm about to post something that will sound insane to everybody here -- and I will admit to you that I don't actually understand what I'm about to try to tell you.
The purpose of the upcoming Fed meeting is that they are suddenly concerned that the Fed is under some sort of attack.
Again, I don't understand all of this. The root of the situation is the Maiden Lane release -- apparently the Maiden Lane release contained some sort of info that, either: 1. opened up an avenue of attack upon the Fed, or, 2. showed some kind of vulnerability that had been previously unknown.
It's an "interest rate attack" of some kind that puts the Fed in a situation which will force them to essentially beg for mercy -- the meeting concerns the Fed creating massive hedging structures against such an attack.
Again, I understand very little of what I heard. After the Maiden Lane release, the rumors of a special meeting came fast and furious. The Fed is now going to have that meeting, and it's a closed-door session. No press. No visitors.
Anyhow, that's the word.
The Fed is concerned about self-defense due to a vulnerability that now exists that apparently didn't exist before Maiden Lane got released -- I don't even know what an "interest rate attack" is.
But, anyhow, that's the chatter out there.
You read that right, while the Fed is pretending to care about interest rate concerns in an increasing rate environment and is hedging ML1, it has one billion DV01 risk for its house bailout package. This is a stunning number: the second rates commence creeping higher, you can kiss all that profit on TARP and what not not only goodbye, but the losses on the SOMA books will likely destroy America. And yes Virginia, it is negatively convex: once rates start creeping wider, they will accelerate faster and faster until everything escapes the control of Ben Bernanke.