More Signs of Banking Contagion

For the past several weeks we have been focusing on macro economic conditions. It seems that all markets, the stock market, the bond market, and real estate are being dominated by the macro environment.

Traditionally, we think of real estate as hyper local, and it is. A piece of waterfront property is going to be valued differently than the same acreage two blocks inland. But still the macro environment is dominating.

There are facilities available for banks that are in trouble to ask the Federal Reserve for help. These short term facilities are accessed through the discount window at the Fed and the what is called the REPO market. But REPO transactions are publicly visible. Banks are reluctant to use the facility because they’re effectively signalling to the world that they’re in difficulty.

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Host: Victor Menasce

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