Repo Madness! QE 3 ($40b a month) vs. Repo ($500b in 2 weeks)

Fed Chair Jerome Powell says it not QE, so let’s just call it REPO MADNESS (the surge in Fed activity surrounding the repo market).

QE3 had The Fed adding $40 billion per month in Treasuries and Agency MBS, then QT (quantitative tightening struck). But the fear of repo madness struck and The Fed started purchasing $60 billion of Treasury bills per month.

More specifically, The Federal Reserve Bank of New York added $86.4 billion in liquidity to financial markets. In two operations carried out Monday, the Fed injected $36.4 billion in overnight liquidity and $50 billion in 32-day liquidity extending into the coming New Year.

Eligible banks took far less than the $120 billion the Fed was willing to offer in the overnight repurchase agreements, or repo, operation, while they wanted just slightly more long-term liquidity than the Fed was offering in the longer-term repo operation. 

Eligible banks want more long-term liquidity? Does this mean more QE? Again??

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Its a good thing that US inflation is so low … except for health care insurance.

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Repo Madness!

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Bondoogle! CPI For Medical Costs Growing At Over 2x Inflation Rate

The Patient Protection and Affordable Care Act (aka, Obamacare) was passed into law by President Obama in 2010. President Obama promised repeatedly that premiums would decline by $2,500 per year under Obamacare. Sounds terrific, no?

The reality is that the YoY growth in the average cost of medical care in the US is now over twice that of CPI “inflation” YoY.

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Well, now you know why House Speaker Pelosi told everyone that Obamacare has to be passed BEFORE you can see what it is in.

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This is what is called by a Swiss economist friend of mine “a bondoogle.”

Here is a video of Senator Elizabeth Warren’s “Medicare For All”.

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Sustainability In Pensions: Where Is The Greta Thunberg For Fiscal Gov’t Responsibility?

Green projects (like California’s bullet train from Victorville to Las Vegas, supposedly to protect the environment) and buzz words like “sustainability” are all the rage. So much so that Swedish high school student Greta Thunberg in traveling the globe like an environmental Stephen of Cloyes, and Nicholas of Cologne (Children’s Crusade of 1212), spreading the doom and gloom about global warming. In fact, San Francisco is painting a mural of Greta to raise awareness for her environmental crusade.

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But where is the Greta Thunberg for government fiscal responsibility and pension reform? THAT is a real problem too!

Consider this graphic from George Mason University’s Mercatus Center showing the fiscal health of states. Pension-laden states like Illinois, Kentucky, New Jersey, Connecticut and Massachusetts are last the US in terms of fiscal health. Primarily due to overpromised public sector pensions. (Note: Virginia is currently the 13th healthiest in terms of fiscal condition). Illinois is the worst.

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How bad is the fiscal condition in Illinois?  They are leading the midwest in net outmigration (and poor Indiana is seeing a positive net immigration, some from Illinois). Of course, tax crazy New York is seeing a large net outmigration, but it isn’t as bad as Illinois!

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Chicago is so bad that even Snake Plisken won’t live  there! Chicago has the largest pension debt to revenue burden of any major US city.

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But Chicago and Illinois aren’t the only places with bloated pension debt and liabilities. In terms of unfunded pension liabilities per household, Alaska leads with $102K per household, followed by the home of the costly bullet train from Victorville California to Las Vegas at  $86K per household.

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So given the massive and growing pension liabilities that will ultimately explode (pension promises are protected under law, so you can’t just cut them).

Speaking of the Children’s Crusade of 1212, the recent Chicago teacher’s strike is using children to push for higher salaries, etc.

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We need a Greta Thunberg to argue for fiscal responsibility in order to maintain a sustainable future.