The Oil Drum | DrumBeat: November 17, 2007

163 comments on DrumBeat: November 17, 2007

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mcgowanmc on November 17, 2007 - 11:40am

Again. The assumption is that we will get
a soft parachute glide to the surface.

The place we "floated" from is the problem we're
leaving behind.

Too late.

The Vortex has "sucked up", is catching, the various countries
mentioned above, being "outbid" for energy.

TPTB just injected $47 billion into the system
Thursday. Where did the Fed get $47 billion?

Meanwhile, the US OECD consumer is/has been shielded from
the $95 crude for as long as possible.

The reason the pundits, consumers have been able to
say that high energy prices haven't impacted
us OECD folks yet.

That will no longer be the case going forward.

Elaine Supkis/Reuters:

" The Fed injected $47.25 billion in temporary reserves, its biggest combined daily infusion since September 19, 2001, to calm a rise in overnight interbank lending rates."

For the Fed want to KEEP THIS GOING. They want to have us run more war costs, spend more on the military AND spend like crazy on consumer goods and real estate! This can't go on for the simple reason, wars always cause inflation since they are run by governments and there are only two ways a government can run a war: looting or taxes! We are trying the looting and it doesn't even begin to cover the costs! And we cut taxes at the beginning of these wars. So the entire model is set to failure. While trying to steal the Ring of Power from the Saddam dwarf, all we ended up doing was create this Dragon, Fafner of China. Now the dragon wants to fry us."

ADHD like Memmel 8D

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xeroid on November 17, 2007 - 12:20pm

I suspect we may see an effect on the dollar exchange rate following the OPEC meeting, I don't think they are very happy with the current value.

Xeroid.

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mcgowanmc on November 17, 2007 - 12:22pm

interesting that you say this:

Right now Venezuela and Iran are trying to force
the meeting to issue a statement on the Dollar.

The KSA is blocking it.

" NEW YORK, Nov 15 (Reuters) - The Federal Reserve on Thursday pumped its biggest temporary daily infusion into the U.S. banking system since just after the Sept. 11, 2001 attacks as short-term lending rates rose on both sides of the Atlantic.

Even though some news about bank write-downs from riskier investments was not as dismal as some investors had feared, underlying strains pushed overnight lending rates up in both the United States and Europe.

"There was a bit more focus on the Fed operations today in context of the rise in Libor (London Interbank Offered Rates)," said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. in New York."

Arkansaw of Samuel L Clemens

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GreyZone on November 17, 2007 - 12:35pm

You can access all of the historical data about Federal Reserve daily Temporary Open Market Operations (TOMOs) online here. (Although one wag recently nicknamed them "POMOs" - Permanent Open Market Operations.) The historical data is accessible from that link. If you go back, roughly since the end of August this year, every single Thursday has been "injection day" for the Fed. Every Thursday has seen the creation of $20-$47 billion in new money, from thin air, thrown at Ben's bankster buddies to rescue their incompetent asses. If you go back further though you see how unusual this activity actually is. The further back you go, at least until around 2001, the weekly total of injections was tiny in comparison to what we see now. And worse, the daily injections for days other than Thursday are growing in size. From nearly nothing to a few billion to several billion to now, this autumn, many daily injections are more than $10 billion per day. Ben is printing money as fast as he dares in an effort to stem the deflationary tide that is running out on him. The question is whether he can continue to print at this rate (or even faster) as losses mount up and imaginary dollars leave the financial system or whether the world may just walk away from the dollar before he has a chance to hyperinflate it.

"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone

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memmel on November 17, 2007 - 1:40pm

My understanding is that these injections are attempts to keep interest rates down now that the economy is no longer growing and we have peak oil induced inflation. ( stagflation ) No one is willing to take risks without high returns. What these injections indicate is that the Fed has lost control of interest rates because they are going against the needs of the market. The Feds can only control to some extent the magnitude of the economy and then in general only when its growing. They cannot change the direction of the economy and they are actually as its becoming more obvious unable to control interest rates. We pretty much have no choice but to undergo a period of high interest rates so investors can recover all the capitol they have lost over the year.

The Fed in trying to stop this could well destroy itself.

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musashi on November 17, 2007 - 4:07pm

TOMO's and POMO's are two completely different things.

POMO's are permanent and don't expire short term.

The last POMO was on 05032007
http://www.newyorkfed.org/markets/pomo/display/index.cfm

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musashi on November 17, 2007 - 4:14pm

And the numbers you mention are wrong, they fail to consider TOMO expirations.

I just posted a link in response to someone else.

People are looking at the wrong numbers while howling for a bail out. Low interest rates just devalue the U$S. If the people whining for adjustable rate relief had any idea as far as what they are doing they would be looking at LIBOR rates that are overwhelmingly used for rate resets. People need to learn to read the papers they sign.

So far LIBOR has been going up while US rates have been going down.

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