
By Pam Martens and Russ Martens: September 18, 2019 ~ Yesterday felt a little like that scene from the 1946 movie “It’s a Wonderful Life” starring Jimmy Stewart. There’s a run on Stewart’s bank because his absent-minded Uncle Billy loses the cash he was sent off to deposit on behalf of the bank. The bank examiners discover there’s money missing and rumors spread. The rumors that spread yesterday were not that money was missing at a Wall Street bank but that liquidity was missing. It had dried up to the point that the major Wall Street banks could not, or would not, handle the demand for loans called overnight repurchase agreements (repos) that were coming their way. (Repos are a short-term form of borrowing where corporations, banks, brokerage firms and hedge funds secure loans by providing safe forms of collateral such as Treasury notes.) The oversized demand for the repos … Continue reading