Weekend At Benny’s

The Fed Report will not be published today. See Thursday’s report for full details.

The Fed did a reverse repo today, draining $6 billion from the system. That’s the first time they have done a reverse repo in recent memory. In addition there were $6.5 billion in repo expirations, bringing the net drain to a rather astounding $12.5 billion. Of course we don’t know how much PDCF was lent last night, nor how much will be lent tonight, but the Fed is continuing to at least offset any liquidity added to the system through its new Alphabet Soup programs, by conducting draining operations in its boring old daily open market operations.

In essence, the Primary Dealers and most big banks are already dead. The Fed is just keeping them on life support and manipulating the limbs and torso. It’s kind of like Weekend At Bernies, only in this case it’s Weekend at Benny’s. We had all better hope that the Fed’s strategy of keeping the PDs on life support while taking away their means of engaging in speculation works, or most of us will be looking at a very different way of life in the not too distant future.

One thing I feel certain of. There are likely to be a lot more poor people and a lot more rich people who are less rich. Jimmy Crack Cayne, and I Don’t Care, is just one of many who will have followed the path of becoming a millionaire by starting out as a billionaire.

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This entry was posted on March 28, 2008 at 12:26 pm and is filed under Money and The Fed. You can follow any responses to this entry through the RSS 2.0 feed.