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Fed Puts Tax Payers At Risk For Hundreds Of Billions

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posted on Apr, 1 2010 @ 03:42 PM
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From my personal blog Fascist Soup:

The Fed seems to have its priorities out of order.

The worthless mortgage backed securities the criminal Federal Reserve has taken off the hands of criminal bankers is putting the US tax payer at 1 billion dollars of risk per basis point.

A basis point is 1/100th of an annual percent of interest. So a 3% bond going up to 3.01% is 1 basis point.

The Fed has deemed it wise to hedge its risks on 25 billion of debt in one portfolio, but has, as far as we can tell, not hedged any of the trillions in worthless MBS debt its now holding.

Should rates continue to rise, this could blow the American monetary system to pieces in very short order.

Zero Hedge lays out the technical details of this discovery at the link below.

Zero Hedge reports


One has to ask why the SOMA is spending all this effort with Blackrock to hedge interest rate risks in a $25 billion MBS portfolio when it’s holding $1.25 trillion of MBS assets, plus a trillion of long dated Agency debentures and Treasuries. There is a billion dollars a basis point of interest rate risk in the SOMA.



Ron Paul, Alan Grayson, and every other activist in the Congress and the Senate should immediately ask the Fed why is Ben Bernanke hedging its ML1 IR exposure, while leaving its SOMA exposure completely unprotected even when the DV01 is about 100 times greater!!! A 1% move in rates would lead to a $100 billion loss for taxpayers. Should we have a failed auction, or go back to Paul Volcker times and have the 10 year hit over 10%… well, you do the math.




posted on Apr, 2 2010 @ 09:10 AM
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Take a look folks.

This is important.

Your money is on the line.



posted on Apr, 2 2010 @ 09:14 AM
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Originally posted by mnemeth1

Your money is on the line.



And the future monies of your children, grandchildren, theirs and perhaps generations beyond that.



posted on Apr, 2 2010 @ 09:20 AM
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reply to post by mnemeth1
 


You forget one main issue here, is always and will ever be the way of the government and the fed to pass the burden of the debt in the nation, from government, to the mistakes of financial institutions and the failures of the rich and wealthy over the needs of the tax payer to the working class.

As everything the working class in the nation will pay for the mistakes of those in the top.

Thanks to the Fed and our corporate run government since the bailouts that is what will become by law.

When is not more money well we got China to come to the rescue.



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