Daniel Halliday
Nov 10 · Last update 5 mo. ago.

What do the latest FED “bailouts” mean for the global economy?

In September 2019 the US Federal Reserve pumped money into the repo or repurchase agreement market multiple times during one week totaling hundreds of billions of dollars. While the mainstream media avoided the term “bailout”, or largely failed to cover the story completely, these measures are widely seen as the first Federal Reserve bailouts since the 2008 financial crisis. What is the significance of these latest bailouts of the US banking system? What does this indicate about the financial regulations put in place in the aftermath of the last financial crisis? And what could this mean for the wider global economy?
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Beginning stages of Recession or financeial crisis
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Beginning stages of Recession or financeial crisis

During September the Federal Reserve Secured Overnight Financing Rate (SOFR) skyrocketed to reach 10%, well above its target of 1.75-2%, meaning cash was in short supply but high demand in unsecured overnight borrowing between banks. The Federal Reserve had to subsequently bail out the repo markets, a secondary financial market tool used by banks to guarantee liquidity, as the FED’s SOFR led to a loss of trust between banks, causing banks to stop trading with each other due to the shortage of liquidity. Coupled with the lack of interest rate hike by the Federal Reserve at the start of this year reflects the dim view held of the US economy as growth has also slowed internationally. Many see this as a sign of deeper problems in US markets and the possible beginning stages of recession or a financial crisis.

apnews.com/3749ffdb28824bb1ba6ddabdcdca2a7b youtube.com/watch?v=Oz5hNemSdWc fortune.com/2019/09/26/the-feds-repo-market-bailout-is-a-sign-of-deeper-problems-that-are-getting-worse-over-time

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Daniel Halliday
Nov 10