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Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 459051  
Subject: Re: Risk-off whispers from Europe Date: 3/28/2013 11:36 AM
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I wonder whether the Fed has yet developed an analysis and/or strategy for how "hot money flows" out of Europe and into US banks and equities might affect its models of the "expected" and/or "intended" effects of its $85 Billion per month purchases of US debt and mortgage securities.

Also, if unexpected $$ Billions of European cash come pouring into the TBTF banks, that cash will end up parked at the Fed, with interest being paid on it to the TBTF through the still-extant and historically aberrant policy of paying of interest on reserves.

Notehound,

I posted somewhere on the boards an article off of the Bloomberg service on how the FED has almost $1 trillion in EU banking monies. This money is all FDIC insured at .25%. I can not for the life of me find the article. I have done an extensive search. The close to $1 trillion dollars of EU banking money is then used as reserves for the $85 billion per month of bond buying. Or something like that.

Cyprus is a crack in the foundation of this intercontinental lending. A few more cracks the the house of cards could fall in, but while the markets would lay in ruin the economies would get out from under with the central banks have even more power printing away and supporting the institutions they serve. JMO

While there is no such thing as the end of the world, there easily could be an end to many a retirement.


Dave
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