Did anyone say that a Swiss person could do that? The free lunches may appear to be on the menu but that doesn't mean they ever get to the table.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Goldman Sachs really needed the new emergency loan window?
- Thread starter seasideheights
- Start date
Did anyone say that a Swiss person could do that? The free lunches may appear to be on the menu but that doesn't mean they ever get to the table.
Quote from Tommy Ryan:
Did anyone say that a Swiss person could do that? The free lunches may appear to be on the menu but that doesn't mean they ever get to the table.
I understand that there is no way you could get a free lunch and that is where my problem is. If the interest rate goes negative for borrowing then it (seems to me) that you could get a free lunch (which just cant be). What am i misunderstanding? Take note that my only knowledge of economics is a macroeconomics text book that i bought at salvation army for 50 cents and read on my breaks at work
Quote from JamesVU2000:
Anything they can do to keep the ponzi scheme going they will do.
Exactly right. The only thing a ponzi scheme absolutely requires is that it be kept going for appearances. Truly, you may want to go long now until this can is kicked even further down the road to the next presidency, or whatever event may end the ponzi scheme. But the Fed and the Treasury definitely have more fire power to keep it going at this stage. There's still time to make money on the upside.
Quote from n00b7r4d3r:
I understand that there is no way you could get a free lunch and that is where my problem is. If the interest rate goes negative for borrowing then it (seems to me) that you could get a free lunch (which just cant be). What am i misunderstanding? Take note that my only knowledge of economics is a macroeconomics text book that i bought at salvation army for 50 cents and read on my breaks at work
Quote from n00b7r4d3r:
I understand that there is no way you could get a free lunch and that is where my problem is. If the interest rate goes negative for borrowing then it (seems to me) that you could get a free lunch (which just cant be). What am i misunderstanding? Take note that my only knowledge of economics is a macroeconomics text book that i bought at salvation army for 50 cents and read on my breaks at work
No major economics involved here. You are not the market maker. And none of the market makers will quote a negative ASK (key word being ASK) on the money to a retail customer/
The market is negative two bid. You put money in you lose two point a year.
And it is one (not negative one ... just 1%) offered. If you lift the offer you are paying 1% on the money. That's a very short term rate so you can't go out and but long term assets without runnibg the risk of that rate going up.
Quote from Tommy Ryan:
And none of the market makers will quote a negative ASK (key word being ASK) on the money to a retail customer/
[/B]
what about the CNY which is quoted at -12 bid /-11 ask here at Oanda:
https://fx1.oanda.com/user/interestrate.html
Quote from demoship:
The discount window is 2.5% now.
I can (in my personal account mind you) generate ~ 2.9% risk free, on assets that "mature" in around a month (so same duration as treasury bills). Only risk is counterparty risk, which you're going to be taking no matter what investment you take.
Now, if you're a bank, and you need some cash, would you rather borrow @ 2.5% through the discount window, or say, 2.7% from another bank?
Oh, and before anyone tries to call bullshit on being able to get 2.9% risk free, it's easy.
Do a conversion for options expiring in april on any highly traded, low volatility, non-dividend (or at least no dividend between now and expiration day in april) stock. The only risks are pin risk (which isn't that big of an issue, you do multiple stocks at multiple strikes, and if worse comes to worse, you unwind the position on expiration day and pay the 1.9 cent / share commission again), your broker going under, or the occ going under. If the occ goes under, I'd be willing to bet anything there will be a bailout to ensure their obligations are met.
This is a joke, right? You're doubling bill-rates and 30bp over LIBOR while holding a conversion? NEW MATHS!
Quote from n00b7r4d3r:
what about the CNY which is quoted at -12 bid /-11 ask here at Oanda:
https://fx1.oanda.com/user/interestrate.html
It's a FOREX rate not a retail rate that you can take as a bank deposit. The "deposit" never leaves the FOREX house. It never gets to a bank account you control, it never gets to currency ... it never hits your hands in a way that you can use it outside of the context of that trade.
So what you have is a situation where they have lent you X CNY (say a million dollars worth) and you now own a million in dollars. They will pay you about 1% a month to be short CNY and you will pick up whatever the current carry is on the dollar. So you may earn a total of 1% + per month for taking the risk of being short CNY.
I'm not saying that is a god bet or a bad one (frankly I have no idea) but that is the nature of where you are post that trade. You have no access to that million outside of the context of that trade. You have made a trade and your profit is linked to the trade not to your alternate uses of the million US.
Now ... if you owned a financial intstitution that was high enough rated to be a reliable counterparty the equation would change.
Thank you for your detailed explantion. I thought that the bid ask quoted was just for money in that currency in general whether it be forex; a personal loan or whatever purpose that someone wanted to borrow or loan money in the currency.
Quote from atticus:
This is a joke, right? You're doubling bill-rates and 30bp over LIBOR while holding a conversion? NEW MATHS!
Go do the research for yourself, there are ~2.9% conversion opportunities available.
You can get it with spiders, or GE, w/ the assumption that you get filled at slightly worse than mid-point on all 3 legs (which is a reasonable assumption when you place the order as a single multi-leg order)