You are here

Pam and Russ Martens: Are Fed's repo loans being repaid by Wall Street or just rolled over?

Section: Daily Dispatches

By Pam and Russ Martens
Wall Street on Parade
Monday, January 13, 2020

Last Friday the usually reliable and fact-intensive financial website Wolf Street threw a hissy fit over how the Wall Street Journal (and by extension, Wall Street On Parade) is reporting the tallies for the repo loans that the New York Fed has been pumping out every business day since September 17, 2019, to the trading houses on Wall Street.

... Dispatch continues below ...


ADVERTISEMENT

Buy metals at GoldMoney and enjoy international storage

GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit:

http://www.goldmoney.com/?gmrefcode=gata



The inflammatory headline blared: "The Wall Street Journal (and Other Media) Should Stop Lying About Repos." The author, Wolf Richter, explained his criticism as follows:

"Here is the 'in' of a repurchase agreement: The Fed buys securities (mostly Treasury securities and some agency mortgage-backed securities) in exchange for cash. This adds liquidity to the market.

"Here is the 'out' of a repurchase agreement: Every repo matures on a set date when the counterparties are obligated to buy the securities back from the Fed at a set price. At this point the repo unwinds and it drains liquidity from the market."

The key flaw in Richter's analysis is that last sentence. ...

Neither the public nor Congress has any proof that these repo loans are being unwound. One or more of the 24 trading houses on Wall Street (primary dealers) that are authorized by the New York Fed to borrow from its money spigot at super-cheap interest rates could simply be rolling over the same loans or using term money to pay off one loan while taking out another loan.

There is a mountain of evidence to suggest that this is exactly what is going on. ...

... For the remainder of the analysis:

https://wallstreetonparade.com/2020/01/are-the-feds-repo-loans-being-rep...

* * *

Toast to a free gold market
with great GATA-label wine

Wine carrying the label of the Gold Anti-Trust Action Committee, cases of which were awarded to three lucky donors in GATA's recent fundraising campaign, are now available for purchase by the case from Fay J Winery LLC in Texarkana, Texas. Each case has 12 bottles and the cost is $240, which includes shipping via Federal Express.

Here's what the bottles look like:

http://www.gata.org/files/GATA-4-wine-bottles.jpg

Buyers can compose their case by choosing as many as four varietals from the list here:

http://www.gata.org/files/FayJWineryVarietals.jpg

GATA will receive a commission on each case of GATA-label wine sold. So if you like wine and buy it anyway, why not buy it in a way that supports our work to achieve free and transparent markets in the monetary metals?

To order a case of GATA-label wine, please e-mail Fay J Winery at bagman1236@aol.com.

* * *

Join GATA here:

Mining Investment Asia
InterContinental Hotel, Singapore
Tuesday-Thursday, March 17-19, 2020
https://www.mininginvestmentasia.com/

Mines and Money Asia
Conrad Hotel, Hong Kong
Tuesday-Wednesday, March 31-April 1, 2020
https://asia.minesandmoney.com/

* * *

Help keep GATA going:

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16