/biz/ - Business & Finance

>>54082815
https://old.reddit.com/r/Superstonk/comments/11p0g4v/atobitt_the_everything_short_slideshow_adapted/

>>54082815
So like the fed turned the reverse repo market into a money market fund because they knew everyone could get fucked on long dated treasuries

>>54082815
>>54082867
So line go up or down?

>>54082893
Only up, forever. Nothing else is permitted.

>>54082893
ONLY
UP
ALLOWED

>>54082815
So why didn't the SVB faggots park the money in reverse repo?

>>54082893
Line goes down on all the speculative trash that has been inflated over the last 12 years. Line go up on real goods.

>>54082957
I don't know. Maybe they had already dug a hole too deep in 2020 before they started offering a good repo rate in 2021, or maybe they don't qualify for it . I was hoping you guys were smarter than me, I just noticed that the reverse repo market allows them to bypass the whole interst rate risk issue

>>54082957
Just copying what the bigger boys were doing.

>>54083482
Pooping and peeing?

>>54082815
How to profit off of this?

>>54082815
>risk free
you imply you misunderstand this part. treasuries are risk-free because the US says so, the fed has nothing to do with that. technically they still carry one kind of risk, which is default, but we can ignore that for now because we're talking about the US.
the fed cannot add any guarantee of either breakeven or a capital gain to any security at all. it cannot do this when it buys assets, it cannot do this when it sells assets. the assets still carry some kind of risk.
but you have the rest of it right.

>>54083557
Suck off the rabbi for inside info

>>54082957
they borrowed money to acquire shitty treasuries at the worst possible time, and then rates crept up too fast and/or they reacted too slow. they're morons that try to force DEI and ESG on customers, they weren't paying any real attention, it's not surprising.
banks legally cannot write-down assets if they borrowed money to acquire those assets. if depositors come asking for money that's locked up in treasuries, and those treasuries are sitting in the portfolio at -15% unrealized, tough fucking titty. no one will make you whole, and if you even try to sell, you go to prison.
these are not facilities that you just come take advantage of. repo and reverse repo are not offerings for the banks' sake. they are for the fed to control the prime rate.

>>54083645
Nobody goes to prison unless you're a goy whistle blower

>>54082956
What if there are no real goods?

>>54083630
>>54083702
who hurt you(r penis)?

>>54083733
This entire situation is bullshit.

Anyone trying to explain it like the government follows rules is hilarious

>>54083723
You going to survive on eating dirt?

Captcha is WAR MR

>>54083771
still some reasonable predictions can be made

>>54083801
Idk, bet on inflation if the Fed is going to guarantee profits for failing banks

>>54082955
>retards still don't know what anarcho-tyranny is

>>54083783
It's a thing apparently

50 IQ brainlet here

Why would anyone buy old treasury bonds from the FED that have a really low yield instead of just buying fresh bonds that have 4-5% yield?

>>54086100
They would buy them for less. The price would take into account the shitty yeild and the current rate of inflation. The market would decide what they are worth

>>54086100
Treasuries are auctioned. They don't pay interest themselves but you buy them below the face value and turn them in at the end for the full face value

So you can imagine you bid $19 for a $20 dollar t-bill you can exercise in a year and your yield is now 5%.. but if suddenly there are other options to get 10% yield no one's is going to pay you $19 for it, they wanna pay $18...so they can cash it in at $20 at the end .. which is how we get to the current issue

>>54086500
>>54086636
But if the FED controls the interest rate they are probably dumping those old bonds because they are planning to raise interest rates even higher making them worth way less than the auction price who would be dumb enough to buy?

>>54083412
My guess: just one bank had >$100 billion in liabilities that needed to be covered. There are regularly 90+ entities using RRP. Facility is at $2.3 trilly right now. There's not enough for everyone without jacking up that number in a way that exposed just how fucked everything is.