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peaceandlove · 06-16-2009, 10:47 PM

Obama Seeks Remake of Fed's Powers: WSJ

Jun 14, 2009, 10:29 p.m. EST

By MarketWatch
LOS ANGELES (MarketWatch) -- President Barack Obama is expected Wednesday to propose a sweeping reorganization of financial-market supervision, including remaking the powers of the Federal Reserve, The Wall Street Journal said in a report on their Web site dated Monday.

The report, which cited people involved in the process, said Obama would call for allowing the Fed to oversee the biggest financial players and to give the government the power to unwind and break up systemically important companies.

Continues: http://www.campaignforliberty.com/wire.php?view=5870

COMMENT from Campaign for Liberty member:

Yep, give the Fed more power per Corollary #2 of Mish's Fed Uncertainty Principle:

Corollary Number One:
The Fed has no idea where interest rates should be. Only a free market does. The Fed will be disingenuous about what it knows (nothing of use) and doesn't know (much more than it wants to admit), particularly in times of economic stress.

Corollary Number Two:
The government/quasi-government body most responsible for creating this mess (the Fed), will attempt a big power grab, purportedly to fix whatever problems it creates. The bigger the mess it creates, the more power it will attempt to grab. Over time this leads to dangerously concentrated power into the hands of those who have already proven they do not know what they are doing.

Corollary Number Three:
Don't expect the Fed to learn from past mistakes. Instead, expect the Fed to repeat them with bigger and bigger doses of exactly what created the initial problem.

Corollary Number Four:
The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it's easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

THURSDAY: Watch Bernanke

Karl Denninger Commentary
Tuesday, June 16. 2009

In light of what I said before about drains of liquidity....

The salmon-colored day is the one to pay attention to.

It is always dangerous to assume that an expiring block of paper will not be rolled. It usually is. But - if it is not, in this case, roughly $100 billion in cash will come out of the "sloshing cash" in the banking system.

Of late it has been unusual for there to be visible OMO. Note that the table's first three columns are zeros - this is the result of The Fed's "unusual" policies, and is why my usual FedWatch has produced no information via this route for months, unlike the September 24th Ticker.

(TIOs can usually be ignored as they rarely have any impact on the overall condition of system liquidity.)

But the TAF maturation, if it does not roll, is a big deal.

What's T+3? Monday/Tuesday after options expiration, a nasty time for a liquidity drain to show up. If that drain does happen on Thursday you can expect to see it in the market some time within the next week, probably Monday or Tuesday, and it won't be pretty.

File this one in the "teach a man to fish" department; you can find this data, any time you'd like it, at http://www.gmtfo.com/reporeader/OMOps.aspx

Now you know how to read one of the tools that I use to watch Ben and his Merry Men - the tool that, in fact, caught him in September of 2008.

UPDATE 9:04 AM: The Fed has just announced an intent to award $48B in TAF paper, implying that about half of the $100 billion will roll and the rest drain. Again you cannot be sure until the day passes, and sometimes until the next day, but this is what it looks like.

SOURCE: http://market-ticker.denninger.net/a...-Bernanke.html

06-16-2009, 10:47 PM	#1
peaceandlove Avalon Senior Member Join Date: Sep 2008 Location: Turtle Island Posts: 2,776	Obama Seeks Remake of Fed's Powers: WSJ Obama Seeks Remake of Fed's Powers: WSJ Jun 14, 2009, 10:29 p.m. EST By MarketWatch LOS ANGELES (MarketWatch) -- President Barack Obama is expected Wednesday to propose a sweeping reorganization of financial-market supervision, including remaking the powers of the Federal Reserve, The Wall Street Journal said in a report on their Web site dated Monday. The report, which cited people involved in the process, said Obama would call for allowing the Fed to oversee the biggest financial players and to give the government the power to unwind and break up systemically important companies. Continues: http://www.campaignforliberty.com/wire.php?view=5870 COMMENT from Campaign for Liberty member: Yep, give the Fed more power per Corollary #2 of Mish's Fed Uncertainty Principle: Corollary Number One: The Fed has no idea where interest rates should be. Only a free market does. The Fed will be disingenuous about what it knows (nothing of use) and doesn't know (much more than it wants to admit), particularly in times of economic stress. Corollary Number Two: The government/quasi-government body most responsible for creating this mess (the Fed), will attempt a big power grab, purportedly to fix whatever problems it creates. The bigger the mess it creates, the more power it will attempt to grab. Over time this leads to dangerously concentrated power into the hands of those who have already proven they do not know what they are doing. Corollary Number Three: Don't expect the Fed to learn from past mistakes. Instead, expect the Fed to repeat them with bigger and bigger doses of exactly what created the initial problem. Corollary Number Four: The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it's easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com THURSDAY: Watch Bernanke Karl Denninger Commentary Tuesday, June 16. 2009 In light of what I said before about drains of liquidity.... The salmon-colored day is the one to pay attention to. It is always dangerous to assume that an expiring block of paper will not be rolled. It usually is. But - if it is not, in this case, roughly $100 billion in cash will come out of the "sloshing cash" in the banking system. Of late it has been unusual for there to be visible OMO. Note that the table's first three columns are zeros - this is the result of The Fed's "unusual" policies, and is why my usual FedWatch has produced no information via this route for months, unlike the September 24th Ticker. (TIOs can usually be ignored as they rarely have any impact on the overall condition of system liquidity.) But the TAF maturation, if it does not roll, is a big deal. What's T+3? Monday/Tuesday after options expiration, a nasty time for a liquidity drain to show up. If that drain does happen on Thursday you can expect to see it in the market some time within the next week, probably Monday or Tuesday, and it won't be pretty. File this one in the "teach a man to fish" department; you can find this data, any time you'd like it, at http://www.gmtfo.com/reporeader/OMOps.aspx Now you know how to read one of the tools that I use to watch Ben and his Merry Men - the tool that, in fact, caught him in September of 2008. UPDATE 9:04 AM: The Fed has just announced an intent to award $48B in TAF paper, implying that about half of the $100 billion will roll and the rest drain. Again you cannot be sure until the day passes, and sometimes until the next day, but this is what it looks like. SOURCE: http://market-ticker.denninger.net/a...-Bernanke.html Last edited by peaceandlove; 06-16-2009 at 11:00 PM.