Date: May 3rd, 2011
Cate: Finance, Risk & Stability, Systems
Tags:

Tarp Bailout was closer to $12.8 trillion in money movement

 

Watch the full episode. See more Need To Know.

HT: Barry ritholtz for this

Pretty amazing video given how big the amounts are and how little investigative work has been done here.  The amounts involved dwarf anything else discussed to date.  The $12.8 trillion has a significant amount of “back stop” money that wasn’t called upon but was effectively guaranteed and with a lot of swap lines etc.

The freeze up in the money markets was obviously looming as a cascading failure.  To learn about  large scale failure in complex systems check out the excellent and fun to read book ubiquity: why catastrophes happen.

Well done to Bloomberg to rock the boat and dig a bit into this.  Please note that the brave ladies and lads at CNBC, Fox business etc. who are busy posing as business journalists really haven’t even touched these issues, much less challenged the fed with an FOIA request.  Investigative or real journalism stops at the edge of the newsdesk and echo chamber for the TV folks.  Please: Reuters, WSJ pick up this torch there is probably Pulitzer material here.

The fact remains that a huge opaque system, the Fed is at work trying to sort out a mess that may be growing quietly larger.  The low rates are helping balance sheets, but it is a race between free FED spread and loan deteriorations.

Only history will correctly identify whether the stealthy approach has prevented a broader crisis of faith in the system in 2008 averting a temporary liquidity issue or whether the game is only perpetuating a problem under the popular extend and pretend sobriquet.

Que sera sera. read when money dies

Disclosure: Long N. Krone, Gold

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