Employment Hopeful?

Unfortunately, there's not really any such thing as momentum in markets (which is why momentum-traders need their stops), but this is hopeful:

Cheerfulness

I've decided that this is Happy Week. Normally I fight my inclination to rave about economic things that are out of my control anyway, and despite the fact that there's a lot of macro to worry about, the fact is that the barrel's already headed over the falls, so we might was well whistle on the way down.

So instead of the normal gloom, I present the following: Rejected newborn red panda adopted by cat. So there.

Federal Californication

Yes, I know I'm a fanatic with the economy that should probably lighten up, but where the "recovery" is concerned, folks should beware of the fact that most of the "recovery" happening in the Obama administration is California-esque stealing from the future, and not a true recovery.

Oh Frak!

It's OFFICIAL, even by the government's standards: Ben Bernanke's pushing on a string.

An interesting idea from the Fed

The Fed, as we know, has a real sticky wicket to get through: it knows that it's gotta find some way to, as the pundits are saying, "drain the swamp" and not let all the positively, massively, completely insane amount of money they've printed out into the wild for good, or else we'll be reprising the German hyperinflation. But, similarly, we've got such a vast debt-deflation hangover that they can't just jack up interest rates, as that would kill off any nascent recovery. They've been kicking around the idea of doing reverse repos for a while (where you sell T-Bills from them and they have to buy them back in the near future); that plus paying interest on reserves would allow them to incent lenders to keep their money on the sidelines, but it's rather limited.

The new idea is to allow not only their primary dealers network, but also money-market funds, to trade treasuries with them. The beauty of this scheme is two-fold. First-off, the primary dealers are fairly limited in what they can absorb at any one time, whereas there's a ton of domestic money-market demand sloshing around. Secondly, and here's the genius of it, the money-market funds would likely not be allowed to trade those T-bills with anyone else (which would infringe the primary dealers) -- thus they get a mechanism by which to handle their duration risk by floating treasuries that by definition cannot escape out into the wild.

... and, when you consider the embedded profits of getting treasuries via a primary dealer that a money-market fund would be able to avoid paying, this would provide a minor boost to the rates they could provide, too.

... and thinking about it, the only way for the money-market fund to profit from the T-bills is either price speculation against only the Fed (an illiquid market -- not so nice) or by banking the coupon payments. This might eventually end up not as actual treasuries (with their unpleasant maturity dates), but as a floating-rate perpetual bonds whose yields are set via the normal auction process (I'm *really* speculating here).

I'm impressed.