Comments on: The Fed’s earnings http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: bobbobwhite http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/comment-page-1/#comment-11074 Tue, 12 Jan 2010 17:38:41 +0000 http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/#comment-11074 Any talk at all about any Fed “profits” with the deficit at its higher-than-heaven-ever-was level is just too ludicrous to fathom. Only our pathetic gov’t would essentially brag, “Hey, we are big losers(for you)in almost everything we have done in this economic crisis, but here is one (puny)example of a (manufactured)profit we made for you(that is not even real; don’t ask for details). How about them apples, Bubba? Whoo-Hoo”

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By: alea http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/comment-page-1/#comment-11073 Tue, 12 Jan 2010 16:45:45 +0000 http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/#comment-11073 so “profits” should be better called “fake alpha.”

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By: alea http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/comment-page-1/#comment-11072 Tue, 12 Jan 2010 16:45:07 +0000 http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/#comment-11072 yes,it is. if the fed had to mark to market like a commercial bank, it would have been toast long ago, but it’s a central bank, different rules apply and they make them.
they can still recognize losses, of course, but you know who pays for that. for ex, almost half of the portfolio are mbs guaranteed by fannie/freddie themselves guaranteed by you know who.

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By: KidDynamite http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/comment-page-1/#comment-11070 Tue, 12 Jan 2010 16:12:54 +0000 http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/#comment-11070 thanks Alea – that’s even sillier though, isn’t it? if they want to make more money, all they have to do it print more money (zero cost) and buy more stuff (positive yield)…

and although they don’t mark to market, they can still recognize losses if and when they eventually sell the assets they bought.

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By: alea http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/comment-page-1/#comment-11066 Tue, 12 Jan 2010 15:01:33 +0000 http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/#comment-11066 KD: the Fed doesn’t mark to market, profits are pure carry.

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By: KidDynamite http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/comment-page-1/#comment-11065 Tue, 12 Jan 2010 13:37:22 +0000 http://blogs.reuters.com/felix-salmon/2010/01/12/the-feds-earnings/#comment-11065 but Felix – what happens when the Fed stops its QE and MBS buying programs? said differently, this “$45B” in profits is a classic ponzi scheme – as long as the fed keeps buying the assets it already owns (marking prices favorably), it shows a profit… once it stops, look out.

in other words, if i were to buy a billion shares of MSFT, i’d almost certainly show a profit by the time i was done, as i’d move the stock higher and my average price would be lower… but when i’m done buying, and the stock trades back down….

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