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Analyst Who Called The Repo Squeeze Warns On ‘Combustible Cocktail’ Into Year-End

"There could be a broader de-leveraging across financial markets".

"There could be a broader de-leveraging across financial markets".
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2 comments on “Analyst Who Called The Repo Squeeze Warns On ‘Combustible Cocktail’ Into Year-End

  1. vicissitude

    Speaking of cash, I found this bit while surfing:

    Treasuring cash
    Why does the U.S. Treasury have so much cash at the Fed?

    First, late in 2008 the Treasury suspended its cash reinvestment program. It used to make short-term loans to banks that needed liquidity. Given low interest rates and the fact that banks have been holding excess reserves, this program hasn’t been necessary, and so the Treasury is holding more cash. Second, since late 2015 the Treasury has been purposefully holding more cash to be prepared for any major disruptions, such as a potential cyber event or a systemic event like the crisis in 2008.

    https://fredblog.stlouisfed.org/2017/10/treasuring-cash/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog

    Then, venturing into a darker space @ FRED, looked at this:

    Collateralization of Currency: Memo Items: U.S. Treasury, Agency Debt, and Mortgage-Backed Securities Eligible to Be Pledged

    https://fred.stlouisfed.org/graph/?g=plSa

  2. It all seems like a wonderful game how to keep the juggling balls up in the air until they suddenly start dropping, because there are too many cash requirement holes to fill. It clarifies a bit how the whole system can start collapsing due to the continued requirement to expand the financial needs. Thanks for the insights.

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