A change of view

Why does this chart, updated as of 2/1 on the fed site now, look so different from yesterday's? Or from the chart update on the site earlier today, which showed an event roughly on the order of magnitude of 9/11? This chart doesn't dip anywhere near the earlier two, the latter of which was well down around -15. This chart doesn't get even close to -5.

More on the unraveling:

The Black Box Economy.

"Our modern shadow banking system craftily dodges the reserve requirements of traditional institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever." -Bill Gross.

"That something is the immense shadow economy of novel and poorly understood financial instruments created by hedge funds and investment banks over the past decade - a web of extraordinarily complex securities and wagers that has made the world's financial system so opaque and entangled that even many experts confess that they no longer understand how it works."

Update: The colleague who brought the first chart (and second chart -not shown here) to my attention, responded to the apparent discrepancy I found later that same day (above chart): "the downward spike in non-borrowed reserves was indeed shown as being around minus 15 billion... It's a bad time to spook the market with mistakes. The earlier graph is out before the public, and they would be wise to explain. Silence would be confirmation that something is amiss. What they haven't changed, yet, is the revelation that aggregate bank capital is under water and the banks have had to borrow $50 billion from the Fed -- more than reserve requirements by billions -- to cover their assets." He in turn sent this to a economics expert who responded, "I am aware of this. They changed the definition of Net Free Reserves. I am working on producing the chart under the old formula."

As my colleague notes: "It appears to be the old shell game at work. Just like they changed the CPI to eliminate 'volatile' food and energy costs."

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