My fishing buddy David Kotok has been detailing the various lending and credit facilities the Fed has been supporting. He just updated it to reflect the most recent cash infusion.

It is rather startling:

Factors Adding to Reserves and Off Balance Sheet Securities Lending Program

via Cumberland Advisors


Category: Credit, Federal Reserve

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

62 Responses to “Total FOMC Lending”

  1. D.L. says:

    Despite all of the “hand-wringing” over the “TARP”, it is really just an extension of the Fed’s “Off Balance Sheet Securities Lending Program”.
    (And besides, who cares about TARP when Fannie and Freddie are buying the toxic stuff anyway?).

  2. D.L.,

    nice points, no doubt. tellingly, the TARP, like the FedRes’ actions, is covering, many, more than one Elephant..

    sorry BR, this is only ‘startling’ to those that have stopped paying attention..

    here’s betting that Kotok is a good (at the min. avid) Fisherman, as well.

    it should go unsaid, but, any Economist, worthy of the name, like any good Fisherman, knows, you have to watch the waters to know the Currents..

  3. jbd says:

    Barry, is it true that the gov’t is getting only preferred shares (non-convertible) in exhange for the capital injections? Is there any reasonable defense for that? Do you think Paulson’s (very recent) allegiances in the industry are affecting his judgment as to what’s best for the taxpayers? Thanks for an excellent blog.

  4. SPECTRE of Deflation says:

    Who will buy the bonds that the world must unleash to pay for all these bailouts? None of the shit is paid for folks but the chart is pretty.

  5. Bruce in Tennessee says:

    I had about a 45 minute talk this morning with my banker. Good man, very bright. I was so naive, it hurts me.

    The bank my partners and I do most of our business with is one of 13 Five Star banks for the state of Tennessee.. 2 days before the initial House vote on the bailout, he was at a meeting with our congressman. Told him why he was against the bill. Congressman asked him to put his reservations in a letter..he did…congressman read the letter on the floor in the initial deliberations…voted against.

    The night after the initial vote he is called at home with conference call…several congressmen and one of our senators. The pork that will be added to the bill is outlined to him. Lobbyist for the Tennessee Banking Association also makes pitch for why the new bill will be better. But pork as we would all call it, has become the theme of why the bill will now pass.

    Industry lobbyists put what they want into the bill. Initial bill that Bush proposes (5 and 1/2 pages) becomes a 2 inch thick Senate bill (we looked at his copies in the office) full of pork. Our senator says could not have been passed otherwise.

    Now our community bank at a disadvantage. What my banker calls costs of acquistion, or the cost of gathering money is still the same for him. Meanwhile, the costs for acquistion for his competitors, because the government has injected money, have decreased significantly.

    He is turning away people who want cd’s…!
    He tells me every cd he writes here, he loses money on…and we talked for 15 minutes about how this massive injection of liquidity makes the intermediate term outlook opaque…he has no idea what we will look like in 12 months, and therefore his fiduciary duties as head of the bank prevent him from making big bets here…

    Anyway, en sum, this is not particularly good news for your local well run community bank.

  6. leftback says:

    Agree that a lot of paper will be issued.

    We are probably going to get one of the softer sets of inflation data for some time this week, starting with what may be a very negative PPI tomorrow (think of recent oil price moves) and a soft CPI on Thursday.

    That is likely to be short-term bullish for Treasuries and equities, but not so good for TIPS, and might trigger a substantial sell-off in gold and a modest rally in Treasuries. In my view that will provide an excellent entry point to go long gold and short long-term Treasuries.

    Anyone know if LIBOR is moving? Any softening in muni yields or high yield rates today? How exactly is Paulson planning to prevent hoarding of cash by banks? Inquiring minds need to know.

  7. Winston Munn says:

    @SPECTRE of Deflation

    That punchbowl has been freshly respiked – please do not remove it from the party.

  8. Bob A says:

    all this crap talk about ‘socialism’ and the ‘end of capitalism’ is just makin me puke.

    how you gonna have capitalism.. which in essence is people investing savings… when you allow the people to do that to be raped and thrown out on the street?

    remember a huge percentage of the shareholders are retirees, pensioners, old folks like my aunt in a nursing home.. people who been saving for 10, 20, 40 years because they trusted in the system.

    all this “let it crash they deserve it” talk needs to be called the crap it is.

  9. fresno dan says:

    I agree the punchbowl has been refilled. As what point do we consume so much punch that we die of alcohol poisoning???

  10. leftback says:


    A lot of people will buy the bonds because they fear the SPECTRE OF DEFLATION.

  11. les says:

    Ben writes: “we will not stand down”. Is he referring to himself? Is he under pressure to resign? Is he signaling that he should not put under pressure to resign

  12. John Borchers says:

    Charts pretty.

    I’m still on the side of market green by close as bond money comes back in. Think a chess game is going on here as to how cheap they can start the collection.

    Once the heard is moving the one way though each other will jump as they always do.

    Think 2-3% up by close.

  13. karen says:

    where to begin… the pump is primed, just wait til it starts flowing. there should be plenty of money to go around :)

    remember, a rising tide raises all boats.

  14. Bruce in Tennessee says:

    Redbook report today:

    “Year on year sales in the October 11 week for Redbook’s tally were up only .5% for the worst reading since the calendar disruptions of Easter. Redbook said sales were concentrated in the basic consumables such as food. Retail sales for September will be posted tomorrow, and weak results, which are expected, are likely to seal expectations of third-quarter recession”

  15. Robert says:

    So we injected $250 billion which bought what? Stock in the banks,fine. Market goes up 900 with the bond market in play. Tuesdy the market goes no where cause it is lost. the bond markets barely move after something like 3 trillion in worldwide liqudity is injected. Does anyone else see this as a warning sign? Japan chooses to not inject money, they have lived with financial problems for 10+ years, another warning sign? Does anyone else find what is happen to iceland to be a waring sign?
    I called Dj below 9000 last week and 5300 before the end of the year.
    I hope am overshooting. Cause I think it will be worse.
    Long puts on all major financial
    Call on mining stocks, gold and oil

  16. SPECTRE of Deflation says:

    leftback, LOL! They should fear a Weimar Style Bailout more, and history speaks for me on this issue. Let me state flatly that there is no way in Hell rates stay low. We may be able to sell them, but the days of easy money are over, and I don’t care what Paulson says on the issue because the Bond Market is telling him to stuff it. The 10 Yr. Treasury auction was not good. 4.03% means an increase of 13 Tails on yield. In the last 10 days we had an auction that was 40 tails. Ask Barry how many times you see a 40 point tail. Hell, it’s never.

  17. DL says:

    leftback @ 1:09:38 PM

    I, too, see the “specter of deflation”, but only for the next several months.

    After that, though, comes the “specter of INFLATION”, as all of the past, present, and (no doubt) future fiscal and monetary stimuli will act to awake the “inflationary dragon”.

  18. SPECTRE of Deflation says:

    One other item. In the FED’S latest statement on Non-Borrowed Reserves, the figure stands at -363 Billion Dollars, but not to worry they have a plan. Surely to God there has to be more ways to steal from the taxpayer.

  19. SPECTRE of Deflation says:

    Karen, all boats were lifted with Ike, but it sure didn’t save them.

  20. MW says:

    Do you hear that ticking Its the Bond Market ready to detonate.

    Got Gold?

  21. karen says:

    Spectre, of course, you are right… very funny. Actually, about the only thing i’m firm on right now is not shorting this market at this level.

  22. Winston Munn says:

    “remember, a rising tide raises all boats.”

    Hmmmm…This may not be a best solution – I don’t recall seeing that many poor and middle class boat owners….

  23. SPECTRE of Deflation says:

    Folks, the $700 Billion Dollar Bailout was passed, but we must enter the auction market to pay for it. We will compete with the EU (1.8 Trillion Dollar Bailout) for all available capital. We have damn little left on the FEDS Balance Sheet that Isn’t toxic. Over 4% on the 10 spells trouble. They people that work on Wall Street ALL know this information, but they don’t want to speak of it. It’s way easier to talk housing being Bush’s fault then dealing with reality which is that every frigging asset class on Earth was inflated using leverage bets multiple times by various groups.

    The Wall Street Barkers also know that notional on Derivatives is pure bullshit when the counterparty says no mas (I ain’t got it pal). That is the truth!

  24. karen says:

    yikes! see the front page of the LA times at

  25. SPECTRE of Deflation says:

    Winston, you didn’t look very closely. Most boats are on the small size for weekend fishing and recreation. Texas has no law regarding only yahts in the state waters. Go to the FL Keys to see who has what. Most are folks like us who aren’t super rich, but like boating, or are you saying an owner of a 22 foot center console is rich?

  26. Bruce in Tennessee says:

    How can you be up 900 one day and down 114 the next?

    You traders have a life I wouldn’t want…

  27. redisthenewgreen says:

    Market seems to have found a direction.

  28. Concerned Citizen says:

    Professor Alan Blinder is suggesting possible 2 million unemployed. It’s bad people, your making a mistake to think otherwise. DOW 6,000 here we come…

  29. karen says:

    spectre, don’t underestimate those caribbean buyers!

  30. SPECTRE of Deflation says:

    Bruce, you either love it or not much like building a house. For some they would never do it again while others love it. The point is always the big picture and not what the shills would have you believe on a daily basis. We do our own homework, and become better able to see the forest through the trees. In most cases the shills can lie like nobody else excepting of course for politicians who hold their own against all comers.

  31. SPECTRE of Deflation says:

    karen, LOL! Why do I have a picture of regarding water damage? NEW INTERIOR!!

  32. DL says:

    QID and SDS.

    The greatest story never told.

  33. SteveC says:

    Bruce, The most important thing is to identify the trend and go with it. The rest is noise for daytraders.

    And to echo an earlier comment, the Fed will successfully slay the deflation beast, preferring to battle inflation instead.

  34. Winston Munn says:

    SPECTRE of Deflation,

    From what I have seen in Florida, all those boats were repossessed just before the home entered foreclosure.

  35. leftback says:

    @ SPECTRE and DL: Your snark detector was not operating. I am not expecting deflation, due to massive intervention. I am short bonds and long gold.

    @ Karen: A rising hedge fund industry raises a number of very large extravagant boats. The small boats just keep bob, bob, bobbin’ along.

  36. dmc says:

    Looks like the market (Dow -200) wants “mo’ bailout, mo’ bailout, mo’ bailout”. dmc.

  37. Bruce in Tennessee says:


    Ya boy, Nouriel, is not seeing this new religion by the Treasury as particularly good news…

    Oct. 14 Roubini Sees Worst Recession in 40 Years, Rally’s End..

    Maybe he’s just got the sound turned off when Bro. Paulson’s lips move…

  38. wunsacon says:

    “A rising tide swamps all derelicts.”

  39. U.S. Coast Guard says:

    Small craft advisory: vessels not rated for Caribbean excursions or Fugawi 2009 should remain in port.

  40. karen says:

    Bruce, the market is broken. It’s not an indictor of anything other than manic fear and greed, jacked up on government intervention.

    Our financial system cannot go cold turkey without dying… think methadone for a heroin addict.

    I would never say the market hit bottom last week, but it was definitely a wake-up call. In the near time, i’m giving the methadone a chance, not that it won’t be painful.

  41. Winston Munn says:

    First we had to bar short sellers. Now, it appears, profit takers must be abolished, as well:

    “Stocks turn lower as profit-taking sets in”

    Greedy bastards! What about my boat?

  42. AGG says:

    The chart is clear. Now we know that Bernake must have studied the geology of mountain chain formation.

  43. Bruce in Tennessee says:

    Well, Karen, I talked with my banker about the same thing this morning as I’ve already posted. He has a master’s from a good school and has been in the banking business more than 30 years…and he thinks hard times are still ahead too, but he will give credit to Paulson for really whacking at the pinata this time…

  44. leftback says:

    We are right on support at SPX 975.

    The methadone had better kick in about now. If this is to be a classic pull-back from the rally, we need to establish a trading range here, say between 975 and 1100. A successful close above 975 is the first step to establshing that range.

    Very weak inflation numbers v. very weak retail sales tomorrow. Pick your poison.

  45. Andy Tabbo says:

    Some words….

    I’m actually happy with the governments actions. I really do think they’re taking the Great Depression 2.0 off the table.

    You don’t get 20+% rallies in 48 hours in normal bull markets. That kind of snapback is almost solely associated with bear market snapbacks.

    950 is sort of key level in my mind….if this market cannot hold 950 today, I’d be getting very nervous on the long side.

    The market failed into the 50% retrace of that UP LIMIT move from a few weeks ago when Paulson first introduced the RTC 2.0 and no mo’ shortselling….

    We hit a very oversold condition on Fri. but we did not get any RSI divergence, which is key to signalling a possible longer term bottom.

    At this point, wouldn’t the path of greatest pain to be set a new low in the next several days?

    The wave counts all suggest at least one more low before end of the year….I would be surprised if we don’t.

    - AT

  46. batmando says:

    On the other thread John posted:
    So many negative posts here after a 10% up day. That means many still have not covered and we get bond inflow today.
    Posted by: John Borchers | Oct 14, 2008 9:01:18 AM

    2:58 pm markets turned back up – PPT to the rescue? or is it all that bond money rushing in?

  47. leftback says:

    Looks like the market is listening to AT so far… support level holding right now.

    Perhaps we shouldn’t be so hard on our leadership. This is what happens when things really go pear-shaped:

    You can now buy shares very cheaply in IceCorp, WOI (Whale Oil Industries) and RockCo. They don’t call it “Wreckjavik” for nothing.

  48. karen says:

    Bruce! An article you may find thoughtful… at least i thot about you upon reading it :)

  49. karen says:

    one more link (sorry!)

    everyone should read paul’s summary (and scroll down to the front cover of the la times if you haven’t seen it yet!)

  50. The Original DC says:


    Is it just me, or does Maria Bartiromo have the most annoying voice in the universe? It’s the sound of a burning man drowning in a sea of perchloric acid.

  51. Steve Barry says:

    Same Kotok who called Dow 10,700 by year-end last night on Kudlow?

  52. leftback says:

    SPX 997 close. Textbook consolidation: pull-back and bounce off support, forming a higher low at ~970. All this is actually quite bullish action in the short-term. A steady decline in the VIX and a small drop in LIBOR are indicating the same thing.

    @ Bruce: I bet you a burger we don’t have any 10% swings for the rest of the week… ;-)

  53. Transor Z says:

    @Karen: Thank you for the links.

    Kedrosky echoes Roubini on unemployment 9% and ~$3 trillion total cost. But I’m really fascinated by two of his predictions: Americans saving more (heaven forbid!) and commodities skyrocketing when the newly lockstep economies all emerge from recession in 12-18 months.

    Lenzner had an interesting column on

    Bretton Woods II? Fascinating question what will happen to the markets after stricter capitalization requirements are implemented globally. Has to happen, doesn’t it?

  54. SR says:

    ie Got Spanglish?

    “Proximity is invariably the first benefit mentioned when discussing near-sourcing in Mexico. But it’s far from being the only one as Mexico morphs into a business friendly country.

    The foundation for today’s business climate was laid with NAFTA—the historic North American Free Trade Agreement signed in 1992. With that understanding, Mexico and the U.S. began a process of harmonization that has led to transformations in the transportation infrastructure, energy, telecommunications, and law. Economic reforms have been substantial since then, but many more are needed, according to the Organization for Economic Co-operation and Development (OECD)…” (cont.)

    ie Follow The Money……

    Oct. 14 (Bloomberg) — Daimler AG, the world’s largest maker of heavy vehicles, will close its Sterling Trucks division in North America and cut 3,500 jobs as it reins in production and shifts manufacturing to Mexico.

    The reorganization involves the closure of plants in the U.S. and Canada at a cost of $600 million and is aimed at saving $900 million a year by 2011, Daimler said in a statement today. The Stuttgart, Germany-based company will retain the Freightliner and Western Star brands in the region.

    Daimler and competitors Volvo AB and Paccar Inc. have seen truck sales dive as growth slows and credit markets seize up. The German company, whose U.S. deliveries fell 30 percent in the first half, will shut Sterling’s St. Thomas, Ontario, factory in March and one in Portland, Oregon, in 2010, when labor deals expire. A new Freightliner plant in Mexico will open as planned(cont.)

  55. Steve Barry says:

    Birinyi puts out a blogger sentiment poll every Monday…Barry used to participate I think. Granted it is not a large number of respondents. This week, for a technical reason, he put it out Tuesday, after the 936 point rise…and SURPRISE!!! Zero bears…yes in one day every blogger turned positive or neutral. What do you think Barry?

    Fully long QID.

  56. I-Man says:

    I think many of you who are convinced we are all plunging into extinction are a little too smart for your own good.

    I will be the first to admit I dont have as much of a factual handle on the root causes of the crisis (other than my common sense take which is that people risked more than they could afford to lose, and borrowed more than they could ever repay) than many posters on here.


    We’ve been in this kind of mess before.

    You dont see moves like we did yesterday everyday.

    Sellers had every chance to send this back to the abyss today and buyers still came in.

    All the talk about a mysterious PPT coming in to save us is crap, no better than the idiots on the yahoo boards always blaming a stock move on “the MM’s, the MM’s” or claiming that some Skull and Bones boys at Goldman were behind this whole thing.

    The market was oversold and due for a relief rally, and yesterday wasnt its sum.

    SPX bounced right off 970 on que, Libor came down a bit, INTC came out and said their outlook was “uncertain” which is WAY better than saying that they already see a significant slow down.

    Everyone seems to want to fade this thing. That in itself is enough to make me a buyer (if I wasnt already net long.)

    Am I just naive? Maybe so, I’m 29 and never traded through ANYTHING remotely like this, and honestly, neither have any of you, right?

    BTW, I’m new to posting here and I was looking for yall all day on the other post. I appreciate all the wisdom shared on here by folks like AT, HCF, Steve Barry, Karen, Bruce in Rocky Top (go vols), leftback, cnbc sucks (I agree) to name a few.

    I trade in isolation, and dont know any other traders, so this blog is like facebook for me.

  57. I-Man says:


    Just call me “Thread Killer”

  58. leftback says:

    @ I-Man: Keep on postin’…. but keep ‘em light ‘n’ tight. ;-) lb

  59. Mythiot says:

    What impact will the bailout have on inflation? Consider the numbers.

    We see from the Cumberland chart that the Fed has increased its balance sheet by about $800 billion since August 2007, with the total now at about $1.6 trillion. This compares to the Fed Board of Governors monetary base of $1.0 trillion (as of October 8) and M3 in the United States of about $14 trillion.

    Given that the United States accounts for about 20% of global M0, my guess is that the global monetary base is probably about five times the US or around $4 to $5 trillion. The global money supply (in terms of M3) is over $60 trillion.

    The interventions recently announced by all of the central banks to deal with the credit crisis will cost on the order of a couple of trillion. What is unknown at this point is the extent to which the Treasuries and other sovereign debt, which will be issued to pay for these interventions, will eventually be monetised and the monetary base expanded.

    If most of the new sovereign debt is monetised, then the global monetary base would increase by 40% to 50%. This is huge, but there are several factors that suggest that the impact on the money supply, and hence inflation, will be much less.

    First, it may be that most of the new sovereign debt is not monetised. At present, there is certainly no lack of demand for Treasuries (but this could change).

    Second, monetary velocity has dropped considerably because of the credit crisis, meaning that banks aren’t lending, meaning that the lending multiplier is negligible, meaning that the expansion of the monetary base will have much less of an effect on the global money supply than would otherwise be the case.

    Third, impacts on the money supply from central banks will be offset by the deleveraging of balance sheets and the deflation of all asset classes that is well underway. We can expect that at least a few percent of the $60+ trillion global money supply will be vaporised over the next couple of years, maybe more.

    So, Weimar is not going to happen, at least not because of the recently announced central bank interventions. Instead, we will see deflation over the next couple of years. What happens after the deleveraging has run its course? That will all depend on the fiscal and monetary policies taken at that time. If Roubini is right (yet again) and this is the worst recession in 40 years, then fiscal and monetary policy in a couple of years will still be inflationary, but no longer offset by deleveraging.

    A counter-intuitive consequence of the impact on the global money supply that deleveraging will have is that the global supply of USD will almost certainly decline at a faster rate relative to other currencies, given that most of the leveraging took place in USD. Which means that the USD will strengthen over the next couple of years. What we’ll see is the exact opposite of what happened during the leveraging of 2002-2007, when the supply of USD increased at a faster rate relative to other currencies and the USD weakened.

  60. mw says:

    Wow! What a massive mountain of $$ the FED is injecting! I think this would be a good cliff to engrave a President on. (Rushmore II) And you know THE President! Or… maybe just another great (or not so great) chief.. ( Chief CRAZY PAULSON)