“You can make a firewall as high as you want and it will be no help”  -Wolfgang Schäuble, new Eurogroup head, and German Finance Minister It was fun while it lasted but the bloom off the LTRO is now turning into, drum roll please, a liability.   Funny how accounting that recognizes this concept works in practice. Zero Hedge has coined the term, LTRO stigma.  Who’dathunk?  Apparently the market is still lathered up that this signals more of this toxic poison, this time under the guise of “firewalls” (and not “ring fence”).  A firewall is supposed to be bullish? source; Zero Hedge Now that the Fed has added duration risk to its portfolio by unloading most of its zero to three years holdings, none other than Bill Gross is predicting the next phase of bankrupting the Fed and by extension the US Treasury.  The excuse for this one will be the familiar dynamite strapped “job disappointment’  caused by adjustments for weather conditions. If  Bill Gross is right,  the Fed starts pealing intermediate term Treasuries and repoing  those into MBS, in effect trashing their portfolio quality even more.   This would allow the TBTFs to dump more bad assets off on the Government via the Fed.  Interest rates have [...]

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