I’m sure if I took the time to grok it would become sensical, but at the moment it would be much more pleasing to simply say “reverse repurchase agreements?” Are you f*cking kidding me?
What’s worse is that the industry term for such transactions are “reverse repos” which a lyaman would bring to mind getting your unpaid car given back to you … which isn’t really how we want American’s thinking the government is treating the banks and all the loans. It sounds like we’ll be giving the banks back the money that we loaned them
I’ll try and break it down a bit more. You’re right that ‘repo’ sounds like repossession, but hopefully Bloomberg readers at least know that there is a difference between the Federal Reserve and a no-credit-check discount car leasing company.
When the Federal Reserve wanted to stimulate the banking system they bought up securities (it used to just be government bonds, but has now expanded beyond that) with money from the treasury. Now, they want to sell these securities back to the public (and by public, I mean large institutional investors and banks) to pull back in some of the money to reduce the risk of inflation/devaluation of the US dollar.
“At the last MIT Venture Capital conference, a speaker brilliantly described the good and bad about VC money:
“Venture capital is like sex. When it’s good, it’s really good. When it’s bad, it’s still good.””—
“What we need to do is to apply the same rules to VC’s which they impose on their companies – force them to make tough choices and get their business models in order. And instead of giving the tax-breaks to the middlemen, let’s give these directly to the entrepreneurs who take the risks and create the innovation. It is the entrepreneurs who fuel the economy, not the venture capitalists or investment bankers.”—What Have VCs Really Done for Innovation?
“Even if every single song, book, and movie was distributed digitally for free, there would still be a need for the music, publishing, and movie industries. There would still be demand for editors, producers, marketers, and all sorts of other services that these industries have always provided.”—Techdirt.
“Clay Christensen has a really interesting theory about how technology “value chains” evolve over time. Basically they typically start out with a single company creating the whole thing, or most of it. (Think of mobile phones or the PC). This is because early products require tight integration to squeeze out maximum performance and usability. Over time, standard “APIs” start to develop between layers, and the whole product gains performance/usability to spare. Thus the chain begins to stratify and adjacent sections start fighting to commoditize one another. In the early days it’s not at all obvious which segments of the chain will win. That is why, for example, IBM let Microsoft own DOS. They bet on the hardware. One of Christensen’s interesting observations is, in the steady state, you usually end up with alternating commoditized and non-commoditized segments of the chain.”—f | cdixon.org (p. 1)
While this is no clear indication of how quickly the US economy will recover, it certainly provides one metric to follow and offers a glimpse into the way our $792 billion is being spent.
ProPublica explains their system:
A stimulus dollar goes through several different steps on its way from the government to a contractor’s pocket where, the hope is, it will be used to create or save jobs. For clarity, we’re using a slightly different breakdown than the government does. Government agencies mostly stick to the somewhat unclear — and overlapping — terms “Appropriated,” “Obligated” and “Paid,” but we’ve tried to give a clearer sense of where money is in the pipeline:
Spent: Money that has actually been paid, leaving the government’s bank account and entering the economy.
In Process: Money that has been committed to a certain project, but not yet paid out.
Left to Spend: Money that’s been set aside for an agency to spend, but which the agency has not yet decided how to spend.
Think lobbying’s awful — but smart? Think again. Lobbying’s not just ethically questionable; it’s also strategically self-destructive. For health insurers, banks, and energy producers alike, lobbying is a major strategic error. Consider, for a second, the wages of lobbying across industries. It has destroyed Detroit, rendered telcos impotent, sapped the vitality of agriculture, and caused insurance and real estate alike to implode.
But the most haunting example is pharma itself: by lobbying hard for subsidies and patent enforcement, what strategic outcome did pharma incumbents realize? A deluge of global low-cost hypercompetition, that has left incumbents shocked, stunned, and stumbling.
Why has lobbying backfired on all these moribund industries? Because asking to be insulated from competition saps incentives for innovation — and sharpens incentives for disruption. In health care, for example, lobbying will simply continue to intensify incentives for governments and radical innovators alike to see sluggish, lazy American insurers and producers as ripe for disruption. The tired, lame games of 1.0 strategy merely prevent organizations from learning the lost art of awesomeness. In the 21st century, ethics is the foundation of next-generation strategy.
“A look at who are the most important creditors of America’s highly indebted public finances reveals something truly remarkable. It is the public authorities themselves! A study by Sprott Asset Management, a Canadian asset management firm distinguished for its intelligent macroeconomic analyses, showed that in 2008 over 4 trillion of the total outstanding public debt of some 10 trillion, or around 40 percent, was in the hands of so-called “intragovernmental holdings”. These holdings include social welfare institutions, whose assets, accumulated in order to be (halfway) able to meet future liabilities, are invested in special Treasury debt instruments, known as “intragovernmental bonds”. In other words, the paying recipient of, say, Medicare, the American health service, is an indirect source of finance for the Treasury. Unusual, remarkable, or rather, alarming? Debtors are now simultaneously creditors.”—From Switzerland With No Love - Wegelin Bank Says Goodbye | zero hedge
“Imagine you were a professional sports bettor but none of the existing information sources – Internet, TV, etc – existed. The only way you could get information was by talking to people who actually saw the sporting events live. This is kind of what it’s like to work in venture and why VCs are so desperate for information.”—