Il 14 novembre la FEDERAL_RESERVE ha immesso nel sistema ben 47 mld di dollari con operazioni a brevissimo termine, accettando collaterali mortgagebacked per circa 23 mld di dollari. Questo dimostra ampiamente che la crisi solo all’inizio e la

It is because we don’t have any bright twelve year olds in government.

One more time, just to be helpful, the story of repurchase agreements – or repos.

If you listen only to the headlines, you will be thrown off. First, these “infusions” are only short term loans. Second, to know the entire amount “infused” on a given day, the repos must be subtracted from the repo expirations of the same day plus any needed treasury demand.

This “repo action” is not money thrown into the general economy – this is money lent to banks. The banks usually lend to each other, but when money gets tight or the collateral is suspect, banks are unwilling to lend or want to charge more than the federal funds rate.

In that case, the fed steps in and makes repurchase agreements with the cash-strapped bank, taking collateral against a loan – usually an overnight loan, although 7-day and 14-day repos are also used.

Today’s $47.25 repo action was offset by repo expirations (money that had to be paid back today) of $40.5 billion plus today’s needed treasury department demand, which was $6.5 billion.

Net, there was only $0.25 billion of new money infused into the system today that could have gone toward stock or bond purchases.

What most people don’t grasp is the significance of the huge repo auction today wasn’t that net money was infused into the system but that so much was needed to cover the banks’ inability or unwillingness to lend to each other. The significance is that it is getting harder and harder for banks to borrow the money they need to function.

From a statistics viewpoint, having more number crunchers collect 30 times more data will not improve the accuracy of the longterm trend that’s being tracked. Instead, it will just add more overhead with little results.

All this crying is ridiculous…..

Where I am there would be institutional resistance to changes in methodology that was perceived to be politically motivated. First of all, the politicos that I deal with have very little knowledge of the technical details of the methodology that we use. Their knowledge is more cursory. It’s the career people who really run things. Most of them are solid Democrat, BTW. This goes up the line to the top career official at my agency who has made it known that he doesn’t like it when we go brief D.C. on our data and they grin and don’t ask the tough questions when we give them good news but take a totally different tack when it’s “bad” news.

So I think the idea of a grand conspiracy driven by partisan politics is unlikely. If there is poor methodology on the surveys it’s more likely to be incompetence and poor professional oversight. I can’t speak for BLS, but where I stand, I just don’t see that happening.