Fed Auctions

I think we all can accept why this happened: the Fed wanted to provide an opportunity for banks to get money at a rate lower than the 4.75 discount rate, possibly staving off worries on banks runs and generally providing some economic credit grease, if you will. What I think is interesting is to consider, is what information may be gained from the results. That is, assuming coalitions are not formed, what does it mean if the auctions result with the Fed lending out the first $20B at 4.25 or something drastically lower than 4.75 (and that is a big what if considering the banks may be able to turn around and sell the debt at least at 4.75)? What does it mean to place so much monetary policy power at the hands of the market? Could this result in a signal of how the market views the large scale growth of the global economy? I am not a macro-economist and am far from able to yet form a coherent post-worthy thought on this but hope these brief questions spur further discussions. Swing at will and lets get som discussion going as this is an opportune learning situation on many fronts.

Info from Fed: http://www.federalreserve.gov/monetarypolicy/files/TAFfaqs.pdf

For an old example of the Treasury's take on uniform price auctions, see: http://treas.gov/offices/domestic-finance/debt-management/auctions-study/upas2.pdf

Using Macros in STATA

If you are programming in Stata, or using macros for any reason, be careful when squaring.
Try the following if interested (commands in italics), though you can see the result:

gl check = -.01
di $check-.01
di $check^2
-.0001
di ($check)^2
.0001

This was done on Stata 8.2 but I also found this to issue on Stata 9.

Remembering a Legend

Today, even Chuck Norris sheds a tear.