Link roundup

Some assorted links that didn't make their way into my previous three posts on tonight's events.

Felix Salmon is optimistic about the effect of the sale of Bear Stearns on the financial markets.

John Jansen has some comments and links on the overnight happenings.

The WSJ Real Time Economics Blog has an absolutely excellent post. Choice quotes:

Fed officials went out of their way to say Bear Stearns was unique in the problems it faced. No other major securities firms are in a similar situation, an official said.

and...

So how much has the financial system changed? Consider securities repo, an essential grease that enables dealers to make markets in a wide variety of credit instruments. In 1990, securities repo credit, at $372 billion was about 13% the size of federally insured bank deposits, at $2.8 trillion.

By last year, securities repo credit had ballooned to $2.6 trillion, 60% of the value of federally insured deposits at $4.3 trillion.

Gross repo among the primary dealers alone (that is, excluding banks but including loans among dealers) was $4.5 trillion on March 5, according to the New York Fed.

How secure is that funding base? Well, consider that two-thirds of repo loans mature or must be rolled over each day. And there is no government guarantee behind them (although Treasurys often collateralize them.) No wonder the Fed worried about a run on the repo market if Bear failed.

They also link to this article from 1992 by Anna Schwartz on "The Misuse of the Fed's Discount Window." That brought back memories for me. The article was required reading in my Money and Banking class back in college.

Calculated Risk links to CBOT Dow Futures. Look out below.

I could paraphrase Paul Krugman thusly: You ain't seen nothin' yet.

Reuters reports that Bear Stearns executives won't be getting any golden parachutes. Good.

Tim Duy expects a big fed funds move (75 or 100 basis points) on Tuesday and worries about a destabilizing fall of the dollar. He uses the word "monetization." Let's hope it doesn't come to that. Check back with me on Tuesday.