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Indicator Of The Year

Odd Numbers

by Zubin Jelveh
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Sep 17 2008 11:21pm EDT

Indicator of the Year

For 2008 will be the Fed's report on its reverse balance scheduled for 4:30. We'll get a chance to see how much investment banks have borrowed from the Fed during a week which included the dismantling of Lehman and the nationalization of AIG.

That level should be at least $87 billion, unless Lehman managed to pay back the Fed. It wouldn't be surprising if it was a lot more, with the Fed now taking junk bonds and equities as collateral.

We'll also get to see how far the Fed's total balance of Treasuries has fallen to. Last week, that figure had dipped to $300 billion in unencumbered Treasuries -- those that aren't potentially tied to any of the Fed's new lending facilities. It likely took another hit this week, which will explain why the Treasury Dept. announced plans to borrow money to hand over to the Fed so that the central bank could "manage the balance sheet impact" of the Fed's new role as the investor of last resort.

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