Jim’s Mailbox

Posted at 8:34 AM (CST) by & filed under Jim's Mailbox.

Dave, 
I guess you could call these collectively…one big OOPS!

Bill


You can avoid reality, but you cannot avoid the consequences of avoiding reality.’
Ayn Rand. (1905-1982).

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A good analogy from Pastor Stanley.

Bill

The Fed Portrays The Greek God Atlas By Attempting To Hold Up The World Through Its Record Intervention In The Commercial Paper Markets & Will End Up Like Sisyphus
October 06, 2021

By Stan Szymanski

If I read this right, it looks like the federal reserve has just set a new record for the amount of overnight reserve repos, 1.6 trillion dollars as if the end of the September quarter. According to ICI Global, the total amount of money market funds worldwide is 4.54 trillion dollars measured in the same time frame. Since I am only good at simple math: 1.6 / 4.54 = .3524 (35%). That mean that United States Federal Reserve is providing slightly over 1/3 of the liquidity to the entire Commercial Paper market! Does that mean that the banks are far beyond being able to trust each other, even for 12 hours that they are refusing to lend to each other??

When you look at the FRED graph for the reverse repos above it just looks parabolic. I remember that it was the commercial paper market that froze up first in 2008 before Lehman happened which looks like Evergrande this time, but now Fantasia Holdings Group Co. has failed to pay coupons on their bonds this week (Bloomberg Quint article by Ken McCallum (10/5/21@ 10:33am IST) so there may be a competition for who the fall guy will be. Thanks to Bill Holter at www.jsmineset.com for letting me bounce my thoughts off of him; Bill shared that this is also the Fed’s effort to keep rates from going negative because negative rates would positively illustrate the clown show we live in!

It is beginning to look like the Fed is the ‘lender of last resort’ for the entire Commercial Paper Market. If so, they have taken on the persona of the Greek god Atlas and are literally attempting to hold up the whole world via providing liquidity to corporations via overnight reverse repos.

Thinking about the Fed’s actions brings to mind another lesson in absurdity and another story of Greek Mythology: Sisyphus. According to Ancient Origins (https://www.ancient-origins.net/myths-legends-europe/myth-sisyphus-lessons-absurdity-009805) : …’The legend of Sisyphus begins with a man who, if we are to believe Homer, was one of the wisest and most prudent of mortals. Nonetheless he would fall out of favor with the gods of ancient Greece. He was taken to the kingdom of the underworld and was forced to endure one of the most pointless and excruciating punishments of ancient mythology. Every day, he would carry a massive boulder up a mountain, straining and sweating all the while. When Sisyphus reached the top of the mountain, the boulder would immediately roll back down the hill in a matter of moments. Sisyphus would then make his tired march down the hill where he would start this task over again. It is said that Sisyphus would be forced to endure this for all of time, performing a pointless, tired task until the end of existence.’…

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