Commodity Trade Mantra

Posts Tagged ‘LTCM’

Here Is Why The Fed Can't Hike Rates By Even 0.25%

The US Treasury and the Federal Reserve (where Zoltan Poszar previously worked) understand and grasp the momentuous implications of even the smallest quantum of interest rate increase. What the Fed doesn’t want, is not one but one thousand LTCMs going off at exactly the same time in what is now the world’s most levered trade.

The Fed Basically Still Uses LTCM’s Financial Models

According to Greenspan, the Fed expanded its balance sheet not to boost the economy or to keep inflation moving higher. It was because the Federal government had such large expenditures that it would have ‘crowded out’ private borrowers if the Fed had not increased the size of its balance sheet.

US Federal Reserve And The Ghosts Of LTCM

The LTCM crisis in 1998 was averted through a Federal Reserve intervention and a new policy instrument had been perfected for the Fed’s toolkit : The ‘Greenspan Put’ – It’s as if the ghosts of LTCM bailout have returned 15 years later.

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