Alea

TAF Undersubscribed

Stop-out rate: 1.390 percent

Total propositions submitted: $138.092 billion
Total propositions accepted: $138.092 billion
Bid/cover ratio: 0.92

Number of bidders: 71

Posted by jck at 10:02 am EST on October 7th, 2008 |

7 Responses to “ TAF Undersubscribed ”

# 1 AC Says:
October 7th, 2008 at 2:28 pm

Our modern economic system is breaking up fast. Cracks and tremors are now appearing everywhere. The fed can try to fill the gaps with dollar bills, and if it is succesful, well enter a deep recession, if it fails, we’re heading for the dark ages.

paradigms lost so far:

Fed cridibility
Market forces
low inflation, sustainable growth
decoupling
real estate growth
globalisation (think economic nationaliism in the benelux, eu etc)
derivatives
rating agencies
corporate governance
investment banking
Federal Home Loan Mortgage Corporation
Mark to market accounting
fair value pricing
securitisation
moral hazard
sustainable public borrowing

# 2 SS Says:
October 7th, 2008 at 2:52 pm

On that note, I’m looking forward to the new pitchfork and torch paradigm. I can think of a number of parties that should be invited to attend.

# 3 Simon Says:
October 7th, 2008 at 5:55 pm

Can I join the party? I have a real nice old pitch fork with long round sharp pointed tynes. Where did you say Dick Fuld was hiding out?

# 4 Amber Says:
October 7th, 2008 at 6:16 pm

it’s david einhorn that you should be after ;)

# 5 Markit Says:
October 7th, 2008 at 6:19 pm

Jce:

what does it mean that the bid-to-cover ratio was less than 1? The auction was yesterday yet Libor was significantly higher today. We have seen numerous bid-to-cover ratios of less than 1 in the TSLF and that was before everything hit the fan.

Let me offer an answer the question. None of this matters. This is a solvency problem, not a liquidity problem. What the banking system needs is more equity capital, not more government sponsored collateralized loans.

You agree these auctions are not working?

# 6 Anonymous Student Says:
October 7th, 2008 at 7:13 pm

Question for JCK and Markit,

I’m trying to wrap my head around all of this. With all of the cds settlements coming due between Friday and the 28th, wouldn’t all of the exposed depository institutions be jumping at the chance to exchange their junk for cash? Same for all of their clients working through them… aka hedge funds and the like?

# 7 Ken Houghton Says:
October 7th, 2008 at 7:29 pm

Got it in One, Anonymous Student.

Alternative: they think they can get a better deal from selling then to the Treasury outright, even with carrying costs, within the next 12 weeks. But, of course, that would NEVER be the case.

So the Credit Crisis is Over!