Repo Madness Is Global? BIS Warns of Looming EU Repo Problems, Doug Noland Repo Analysis

Doug Noland (Credit Bubble Bulletin) put out an interesting piece on Repo Madness over the weekend.

Here’s some excerpts:

“U.S. securities/“repo” finance is clearly a major source of liquidity for the markets as well as the real economy. Yet this Bubble Dynamic is undoubtedly global, with international securities finance instrumental to inflating securities and asset markets around the world. A Bloomberg article this week referenced a $9.0 TN European “repo” market. There are also large repo markets in Japan and throughout Asia. How much finance used to leverage global securities is originating out of the likes of Hong Kong, Singapore and Shanghai – not to mention the Cayman Islands and Luxembourg? How much global “repo” finance has been flowing into U.S. debt markets?

Notably, ROW U.S. “repo” Liabilities jumped $292 billion, or 43%, in nine months to $1.207 TN. How much of this ROW market activity – securities buying and “repo” finance – emanates from global “repo” and off-shore financial centers funding leveraged speculation in U.S. securities?

Who holds these Trillions of “repos”? Broker/Dealers lead with $1.467 TN, followed by Money Market Funds at $1.173 TN; Rest of World at $781 billion; Foreign Banking Offices in U.S. at $403 billion; and the Fed’s recently acquired $203 billion. In extraordinary growth, over the past year “repo” holdings have increased $302 billion for the Broker/Dealers; $252 billion within Money Market Funds; $145 billion for Rest of World; $98 billion at Foreign Banks in the U.S.; and $203 billion held by the Fed.”

Doug Nolan’s Repo Madness full article from over the weekend is here: creditbubblebulletin.blogspot…

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