Tuesday, January 29, 2008

Another word on the Fed

I'm sorry but listening to Trish Regan (I don't mind watching her) on CNBC today almost made me puke. She was interviewing guests and was asking questions that suggested that the strong Durable Goods report could allow the Fed to just cut .25 basis points tomorrow. The cut tomorrow has nothing to do with the economy; it has to do with the health of the banking suystem! And the Fed, with its TAF (Term Auction Facility) now knows the health of the banking system. And it sucks!

The latest results of the TAF show that $30 billion was borrowed at 3.123% for 28 days. Two weeks ago the rate was 3.95%.

Thank goodness the TAF is anonymous. Look at the non-borrowed reserves in the picture above! Click on it. They are falling out of bed. The banks are borrowing their reserves from the Fed!

Tomorrow the Fed cuts fifty. (more on the TAF story below)