Financial Market Reforms & Alerts

Please be aware of some imminent financial plumbing issues. These can create emergency problems with banks.

First, the Bank Term Funding Program is quickly winding down. This will continue to put pressure on bank balance sheets. That issue has not been solved as rates are higher today than they were when the program went into effect, translating to very large mark to market losses for a number of bank balance sheets.

Second, the government and yellen has been funding the government through excessive Treasury Bill issuance, which is draining capital from the reverse repo line, which is at its lowest in several years. When this runs out, the government will be forced to start issuing more bonds and, as a result, interest rates will spike further.

Third, I think it is important from a messaging perspective to start screaming from the high hills that the economic data has been manipulated like never before, even the Jerome Powell noted as much. Because when you take over, the numbers will mysteriously suddenly get worse. The backwards revisions have been omni-occurring.

These issues are beyond my scope, but Zoltan Poszar is largely seen as the expert in financial plumbing area (he helped with the solutions during the GFC).

I would also note, as you have probably seen, Biden admin is repeating the same hiring acceleration as Obama did to entrench loyalists throughout government. I would have these people identified and fired as they are likely sleeping problems.