Skip to comments.WTF Chart Of The Day: "Holy $340 Billion In Quarter-End Window Dressing, Batman"
Posted on 06/30/2014 11:23:45 AM PDT by PoloSec
If there ever was any question as to what the purpose of the Fed's Reverse Repo liquidity facility was, or is (and considering we already explained it before in Fed Soaks Up Record $200 Billion In Year End Excess Liquidity and Month-End Window Dressing Sends Fed Reverse Repo Usage To $208 Billion: Second Highest Ever), the amount of reverse repos issued by the Fed to make banks appear healthier than they are and to cure whatever "high quality collateral" shortfalls banks are now chronically experiencing, should slam the door shut on any future debate just what the motive behind the Reverse Repo is.
Behold: a record $340 billion in reverse repos submitted by the world's financial institutions with the Federal Reserve, an increase of $200 billion overnight, and amounting to a record $3.5 billion on average among the 97 operations participants. Considering this is a clear quarterly event, it goes without saying that all the reverse repo is, is a quarter-end window dressing mechanism underwritten by Mr. Chairmanwoman itself.
That there was some $200 billion in excess reserve liquidity as of yesterday's market close (which today was handed over to the Fed in exchange for one day rental of Treasurys), or that banks actually have a third of a trillion gaping shortfall in collateral, hardly needs discussion.
Expect total reverse repo usage tomorrow to plunge by at least $150 billion as the banks will have fooled their regulator, which also happens to be the Fed, that they are safe and sound. Rinse, repeat, until the entire financial system collapses once again and people will ask "how anyone could have possibly foreseen this."
As we said last time:
So step aside any sophisticated claims that the Fed's reverse repo is a means to extract liquidity when the time to raise rates finally comes: all this latest "tool" in the Fed's arsenal is, is nothing more than a Fed-mandated and endorsed mechanism with which the banks can fool regulators and investors that they are in a far healthier condition than they really are.
And judging by the humiliating episode involving Bank of America's made up numbers that punked the Fed into believing America's most insolvent TBTF bank was healthy enough to give be billions to investors, one of the parties most "confused" by what the RRP does, is the Fed itself.
I give up, what am I reading here?
Note the statement: “the amount of reverse repos issued by the Fed to make banks appear healthier than they are”
It all a shell game wherein the Fed temporarily buys back securities from the banks thereby making the banks look like they have more money than they do (i.e., healthier than they really are). In a day or two, the Fed will sell the securities right back to the banks, un-doing the temporary purchase. Just money moving around for the express purpose of window dressing.
So, fraudulent accounting, then?
I’ll try this on my next quarterly filing.
Fraud is the new normal.
Moving money from the right pocket to the left. Then back to the right. Whoo Hoo, I gots cash!
Remember the jobs program?
They pay you to dig a hole at your neighbor's house, while he digs a hole at yours.
Tomorrow, they pay you to fill it in...
Exactly. In simple terms that’s what they’re doing. Just lending money overnight to make the other party look financially solvent. Then take it all back after the clock strikes 12.
Unfortunately there’s an awful lot of window dressing going on in the government. IMO most numbers are cooked to shape public opinion and/or justify policies, even if only temporarily. And yes, it is in essence outright fraud.
We have a great big national hole. Its called the U.S. National Debt and its closing in on $18 TRILLION. But even that amount pales in comparison to the unfunded liabilities of an astounding $123 TRILLION! But we need to keep digging. lol
The sooner the old United States collapses, the sooner the new one can get up and running.