Stagflation Redux???
08-03-2008, 08:22 PM
#42
I feel the need...
Thread Starter
Up, Up and Away ...
Half the world is living with double-digit inflation, as boom gives way to bust.
http://www.newsweek.com/id/150418
Globalization used to be all about making things cheaper. It's hard to think of much that didn't go down in price over the past few decades—cars, electronics, consumer goods of all kinds, services like banking and telecommunications—as the global movement of goods, labor and capital played out around the world, enriching developed countries and emerging markets alike. In fact, between 2003 and 2007, world GDP grew 5 percent per year—faster than it ever has—even as inflation remained under 4 percent. Freer trade, cheaper emerging-market labor, better technology and more plentiful capital all collided to make this early part of the century the most prosperous in the history of our planet.
This sea change in global opportunity and prosperity is a compelling story. So compelling, in fact, that until quite recently, consumers, policymakers and even the bankers financing it all seemed to have forgotten there was a downside. With this unprecedented growth has come greater global demand for things such as labor, food, and energy.
And now, for the first time in 35 years, the world is facing a serious, and synchronized, surge in inflation. The increasing interconnectedness of global trade and capital markets that fed the boom is now speeding the dark side of globalization around the world faster than ever before.....
This sea change in global opportunity and prosperity is a compelling story. So compelling, in fact, that until quite recently, consumers, policymakers and even the bankers financing it all seemed to have forgotten there was a downside. With this unprecedented growth has come greater global demand for things such as labor, food, and energy.
And now, for the first time in 35 years, the world is facing a serious, and synchronized, surge in inflation. The increasing interconnectedness of global trade and capital markets that fed the boom is now speeding the dark side of globalization around the world faster than ever before.....
08-21-2008, 03:27 PM
#43
I feel the need...
Thread Starter
U.S. Economy: Housing, Prices Raise Stagflation Risk
U.S. builders broke ground on the fewest new homes in 17 years and producer prices climbed the most since 1981, providing no sign of an economic recovery or easing inflation.
Housing starts fell 11 percent in July to an annual rate of 965,000, the Commerce Department said today in Washington. The Labor Department reported the producer price index jumped 9.8 percent from a year before.
``There's no doubt we're in a period of stagflation now,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York who formerly worked at both the Federal Reserve Bank of New York and the Fed Board in Washington.....
Housing starts fell 11 percent in July to an annual rate of 965,000, the Commerce Department said today in Washington. The Labor Department reported the producer price index jumped 9.8 percent from a year before.
``There's no doubt we're in a period of stagflation now,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York who formerly worked at both the Federal Reserve Bank of New York and the Fed Board in Washington.....
09-21-2008, 07:36 PM
#44
I feel the need...
Thread Starter
Dollar May Get `Crushed' as Traders Weigh Up Bailout
Treasury Secretary Henry Paulson's plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue.
The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates.
``As we get to the other side of this, the dollar will get crushed,'' said John Taylor, chairman of New York-based International Foreign Exchange Concepts Inc., the world's biggest currency hedge-fund firm, which manages about $15 billion.
The dollar fell against 14 of the world's most-traded currencies on Sept. 19, including the euro, as Paulson unveiled the plan, while the Standard & Poor's 500 Index rose 4 percent. The plan may end the rally that began in June and drove the U.S. currency up 10 percent versus the euro, 2 percent against the yen and almost 13 percent compared with Brazil's real, strategists said.
Paulson's plan, sent to Congress Sept. 20, would mark an unprecedented government intrusion into markets and increase the nation's debt ceiling by 6.6 percent to $11.315 trillion. Officials may also start a $400 billion Federal Deposit Insurance Corp. pool to insure investors in money-market funds.....
The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates.
``As we get to the other side of this, the dollar will get crushed,'' said John Taylor, chairman of New York-based International Foreign Exchange Concepts Inc., the world's biggest currency hedge-fund firm, which manages about $15 billion.
The dollar fell against 14 of the world's most-traded currencies on Sept. 19, including the euro, as Paulson unveiled the plan, while the Standard & Poor's 500 Index rose 4 percent. The plan may end the rally that began in June and drove the U.S. currency up 10 percent versus the euro, 2 percent against the yen and almost 13 percent compared with Brazil's real, strategists said.
Paulson's plan, sent to Congress Sept. 20, would mark an unprecedented government intrusion into markets and increase the nation's debt ceiling by 6.6 percent to $11.315 trillion. Officials may also start a $400 billion Federal Deposit Insurance Corp. pool to insure investors in money-market funds.....
09-22-2008, 11:14 AM
#45
99 TL, 06 E350
They will get to Hyperflation faster now since they got to print so much money for all these bailouts. BTW...we're all into the economic cycle to hit a recession. So we are all going to see a slow down for years to some.
09-22-2008, 02:33 PM
#46
The sizzle in the Steak
....and the Commodities are skyrocketing
10-06-2008, 06:41 PM
#48
I feel the need...
Thread Starter
Deflation Threat Returns as Asset Markets Decline
As Federal Reserve Chairman Ben S. Bernanke and his global colleagues fight the worst financial crisis since the 1930s, one danger is looming larger by the day: deflation.
With asset markets tumbling, commodity prices plunging the most in 50 years and banks keeping a tighter grip on credit, the ingredients for a sustained period of falling prices are coalescing. While inflation is still a concern for many policy makers only months after oil and food prices peaked, the risk is their patchwork of rescue and stimulus packages will fail, and prices will start to fall throughout the broader economy.
``The ghost of deflation could be dragged out of the closet again in coming months,'' says Joerg Kraemer, chief economist at Commerzbank AG in London.
A global recession is already looking more likely, with the credit freeze stirring memories of Japan's decade-long struggle with deflation in the 1990s. So European Central Bank President Jean-Claude Trichet and Bank of England Governor Mervyn King may be forced to follow Bernanke, whose Fed has chopped its benchmark rate by 3.25 percentage points since August 2007 to 2 percent -- its most aggressive round of easing in two decades.
The deflation scenario might go like this: Banks worldwide, stung by $588 billion in writedowns related to toxic assets -- especially mortgage-related securities -- will further reduce the flow of credit, strangling growth. That will push house prices lower, forcing additional losses and making banks even more reluctant to lend. As the credit crisis worsens, businesses will find it almost impossible to raise prices.....
With asset markets tumbling, commodity prices plunging the most in 50 years and banks keeping a tighter grip on credit, the ingredients for a sustained period of falling prices are coalescing. While inflation is still a concern for many policy makers only months after oil and food prices peaked, the risk is their patchwork of rescue and stimulus packages will fail, and prices will start to fall throughout the broader economy.
``The ghost of deflation could be dragged out of the closet again in coming months,'' says Joerg Kraemer, chief economist at Commerzbank AG in London.
A global recession is already looking more likely, with the credit freeze stirring memories of Japan's decade-long struggle with deflation in the 1990s. So European Central Bank President Jean-Claude Trichet and Bank of England Governor Mervyn King may be forced to follow Bernanke, whose Fed has chopped its benchmark rate by 3.25 percentage points since August 2007 to 2 percent -- its most aggressive round of easing in two decades.
The deflation scenario might go like this: Banks worldwide, stung by $588 billion in writedowns related to toxic assets -- especially mortgage-related securities -- will further reduce the flow of credit, strangling growth. That will push house prices lower, forcing additional losses and making banks even more reluctant to lend. As the credit crisis worsens, businesses will find it almost impossible to raise prices.....
11-30-2008, 09:19 PM
#49
I feel the need...
Thread Starter
Economic rescue could cost $8.5 trillion
.....But the Bush administration and the economic team that Obama is rapidly assembling like a war Cabinet are vowing to spend whatever it takes to avoid a depression; they'll worry about the effect later.
"I don't think that there's any way of denying the fact that my first priority and my first job is to get us on the path of economic recovery, to create 2.5 million jobs, to provide relief to middle-class families," Obama told reporters last week.
"But as soon as the recovery is well underway, then we've got to set up a long-term plan to reduce the structural deficit and make sure that we're not leaving a mountain of debt for the next generation."
The mountain is already there, and rising faster than at any time since the 1940s, when the United States was fighting a global war.
Analysts say the current flood of red ink calls into question Obama's ability to launch programs such as middle-class tax cuts and a healthcare overhaul. In 1993, a deficit only a third the size of next year's projected $1 trillion prompted President Clinton to abandoned his campaign pledges of tax cuts.
Once the financial crisis eases, higher interest rates and soaring inflation will be risks. If they materialize, they could dramatically increase the government's borrowing costs to meet its annual debt payments. For consumers, borrowing could become more expensive even as the price of everyday items rise, holding back economic growth.
"We could have a super sub-prime crisis associated with the meltdown of the federal government," warned David Walker, president of the Peter G. Peterson Foundation and former head of the Government Accountability Office......
"I don't think that there's any way of denying the fact that my first priority and my first job is to get us on the path of economic recovery, to create 2.5 million jobs, to provide relief to middle-class families," Obama told reporters last week.
"But as soon as the recovery is well underway, then we've got to set up a long-term plan to reduce the structural deficit and make sure that we're not leaving a mountain of debt for the next generation."
The mountain is already there, and rising faster than at any time since the 1940s, when the United States was fighting a global war.
Analysts say the current flood of red ink calls into question Obama's ability to launch programs such as middle-class tax cuts and a healthcare overhaul. In 1993, a deficit only a third the size of next year's projected $1 trillion prompted President Clinton to abandoned his campaign pledges of tax cuts.
Once the financial crisis eases, higher interest rates and soaring inflation will be risks. If they materialize, they could dramatically increase the government's borrowing costs to meet its annual debt payments. For consumers, borrowing could become more expensive even as the price of everyday items rise, holding back economic growth.
"We could have a super sub-prime crisis associated with the meltdown of the federal government," warned David Walker, president of the Peter G. Peterson Foundation and former head of the Government Accountability Office......
12-01-2008, 01:11 PM
#50
Moderator Alumnus
https://acurazine.com/forums/showpos...postcount=1054
: 
Where art thou?
Are you still playing checkers?
: Where art thou? Are you still playing checkers?
I am still waiting for the stagflation you promised a couple years ago
12-01-2008, 02:39 PM
#51
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning.
A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days.
What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy?
Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.
By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.
We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
With love,
Ben Bernanke
http://www.federalreserve.gov/BOARDD...21/default.htm
A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days.
What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy?
Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.
By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.
We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
With love,
Ben Bernanke
http://www.federalreserve.gov/BOARDD...21/default.htm
12-01-2008, 07:47 PM
#52
I feel the need...
Thread Starter
Homeslice, just like the housing bubble you denied, all good things come to those who wait! 
http://research.cibcwm.com/economic_...oad/snov08.pdf
http://research.cibcwm.com/economic_...oad/snov08.pdf
12-02-2008, 07:59 PM
#54
I feel the need...
Thread Starter
Whadya want me to do now, predict Armageddon? :wink:
Really, I'm not that smart -- otherwise I'd be running my own hedge fund. But based on the recent returns in the Hedge fund community, a lot of people are waking up to the realization that maybe leverage makes a lot of people appear smart on the way up and not so much in the opposite direction. Since Uncle Sam is basically one super duper hedge fund, we'd better hope the gurus in DC pull the right levers.
Don't just take my word for it. According to Dr. Ken Mayland of ClearView Economics, LLC...
The mess has policymakers tripping over themselves coming up with fixes. Bloomberg News has tallied up the face values of all the Fed, Treasury, FDIC and other programs, and it comes $7.4 Trillion! Wow! This is REALLY starting to add up. Bianco Research has separately computed the inflation-adjusted costs of the Marshall Plan, the Louisiana Purchase, the Race to the Moon, the S&L crisis, the Korean War, the New Deal, the Invasion of Iraq, the Vietnam War, and NASA, finding that they add up to just $3.9 trillion...
First comes love, second comes marriage, then comes stagflation in a baby carriage...
12-03-2008, 12:45 AM
#55
Suzuka Master
Join Date: May 2001
Location: PA
Posts: 5,773
Likes: 0
Received 0 Likes
on
0 Posts
You mean like how I predicted a nasty end to the housing bubble. Or how I predicted the oncoming recession. Or how I predicted Team Dubya to be wrong on a wasteful invasion of Iraq, that Saddam was a paper tiger and served as a foil to Iranian influence in the region. Or how I predicted Canada dollar parity to USD. Or how I predicted the oil spike...
12-03-2008, 04:47 AM
#56
I feel the need...
Thread Starter
Clearly not as rich or as cool as you, since I haven't graduated to Bentleyzine or Ballerzine. I think my next investment will be in wheelbarrows, by the looks of the way things are going, every US consumer will have to use one soon to carry all their dollars to the grocery store ala the Weimar Republic.
12-03-2008, 12:16 PM
#57
Moderator Alumnus
You mean like how I predicted a nasty end to the housing bubble. Or how I predicted the oncoming recession. Or how I predicted Team Dubya to be wrong on a wasteful invasion of Iraq, that Saddam was a paper tiger and served as a foil to Iranian influence in the region. Or how I predicted Canada dollar parity to USD. Or how I predicted the oil spike...
Where are your posts where you specifically predicted the housing bubble imploding as it did, or how about your posts showing where you predicted the economy going into a recession due to the international credit markets imploding as it did, etc...
You didn't predict a temporary oil spike, you went off on "peak oil" and how prices would only go up. We see how that turned out
And where is your post from 2003 about Iraq? I do remember how you wanted us to run from Iraq and hand it over to Iran and al Qaeda, while I supported the surge, and we also know how that has turned out.
Posting a lot of doom and gloom articles where 1/10 might come to pass is hardly something I would be patting myself on the back for.
Economic cycles are cyclical, so saying that they will go down after their peak hardly makes you a guru.
Really, I'm not that smart -- otherwise I'd be running my own hedge fund.
But you say that you predicted the housing bubble crash, then why didn't you short all the home builders in 2006?
You say you predicted the recession, why didn't you short all those investment bank stocks?
Or oil futures, or loonies?
You must be really dumb to pass up all that money, since you knew all those things were going to occur
Don't just take my word for it. According to Dr. Ken Mayland of ClearView Economics, LLC...
http://www.cvecon.com/index2.html
First comes love, second comes marriage, then comes stagflation in a baby carriage...
http://www.cvecon.com/index2.html
First comes love, second comes marriage, then comes stagflation in a baby carriage...
I am willing to take your word for it, I am just giving you a chance to live up to your self anointed title of the "Guru of M&I" and give us a specifics about the impending stagflation.
12-03-2008, 07:33 PM
#58
I feel the need...
Thread Starter
But you say that you predicted the housing bubble crash, then why didn't you short all the home builders in 2006?
You say you predicted the recession, why didn't you short all those investment bank stocks?
Or oil futures, or loonies?
You must be really dumb to pass up all that money, since you knew all those things were going to occur
You say you predicted the recession, why didn't you short all those investment bank stocks?
Or oil futures, or loonies?
You must be really dumb to pass up all that money, since you knew all those things were going to occur
You know what my personal brokerage statements looks like? 
Thanks for confirming you've got a big enough man-crush on moi to look me up.
I am willing to take your word for it, I am just giving you a chance to live up to your self anointed title of the "Guru of M&I" and give us a specifics about the impending stagflation.
12-04-2008, 09:36 PM
#59
I feel the need...
Thread Starter
Recession’s Grip Forces U.S. to Flood World With More Dollars
The world needs more dollars. The United States is preparing to provide them.
In an all-out assault on capitalism’s worst crisis since the Great Depression, the U.S. is taking on the role of both lender and borrower of last resort for the global economy.
The Federal Reserve, which has already pumped out hundreds of billions of dollars, might formally adopt a policy of flooding the world financial system with even more money. The Treasury, on course to borrow some $1.5 trillion this fiscal year, may tap global capital markets for even more to finance a fiscal stimulus package of as much as $700 billion and provide additional bailout money for banks.
“You want to do everything you can when you’re facing the threat of a deflationary breakdown of the economy,” says Michael Feroli, a former Fed official who is now an economist at JPMorgan Chase & Co. in New York. He sees the central bank cutting the overnight lending rate to zero in January and holding it there throughout the year.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are being forced to pull out the stops because the extraordinary actions they’ve taken so far have failed to gain much traction. Credit markets are collapsing, stock prices are plunging and the world economy is sinking into a recession.
As the economy deteriorates, deflation -- a sustained decline in wages and prices -- is emerging as a new threat. U.S. government figures last week showed that consumer prices excluding food and fuel costs fell in October for the first time since 1982.....
In an all-out assault on capitalism’s worst crisis since the Great Depression, the U.S. is taking on the role of both lender and borrower of last resort for the global economy.
The Federal Reserve, which has already pumped out hundreds of billions of dollars, might formally adopt a policy of flooding the world financial system with even more money. The Treasury, on course to borrow some $1.5 trillion this fiscal year, may tap global capital markets for even more to finance a fiscal stimulus package of as much as $700 billion and provide additional bailout money for banks.
“You want to do everything you can when you’re facing the threat of a deflationary breakdown of the economy,” says Michael Feroli, a former Fed official who is now an economist at JPMorgan Chase & Co. in New York. He sees the central bank cutting the overnight lending rate to zero in January and holding it there throughout the year.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are being forced to pull out the stops because the extraordinary actions they’ve taken so far have failed to gain much traction. Credit markets are collapsing, stock prices are plunging and the world economy is sinking into a recession.
As the economy deteriorates, deflation -- a sustained decline in wages and prices -- is emerging as a new threat. U.S. government figures last week showed that consumer prices excluding food and fuel costs fell in October for the first time since 1982.....
.....Bernanke and Paulson might welcome a bit of that exuberance right now -- even at the risk of higher inflation later -- as they try to prevent the biggest credit catastrophe in decades from sending the economy into a deflationary nosedive.
“It’s true that, over the long run, too much money creates inflation,” says Lyle Gramley, a former Fed governor now at the Stanford Group Co. in Washington. “But they’re trying to keep the economy from going over the precipice and into the abyss.”
“It’s true that, over the long run, too much money creates inflation,” says Lyle Gramley, a former Fed governor now at the Stanford Group Co. in Washington. “But they’re trying to keep the economy from going over the precipice and into the abyss.”
12-05-2008, 07:00 PM
#61
I feel the need...
Thread Starter
Deflation is nasty for all parties. Anyone who owns deflating assets can attest to that, myself included.
Not that stagflation or stag-deflation is better or whatever you want to call this current fiasco is. The job numbers this morning was horrendous.
The real unemployment rate is now almost 12% according to gov stats -- halfway to the 25% of the great depression…
http://www.bls.gov/news.release/empsit.t12.htm
If the capital markets don't work, main street is out of work - and that is what is happening now. Everyone takes the mechanisms of liquidity and capital flows for granted until they don't function.
Here is an e-mail question from a colleague this morning addressed to me (edited)
My response:
I would tend to agree that the prime homebuying window is now (as long as you fully intend to stay put for a long time). As much as it is hard to believe that THE Numero Uno economy in the freakin' universe can face a Japan type scenario, the benchmark curve certainly is pricing one. I have to believe the flight to quality bid recedes sooner or later -- the crowding out effect is certainly impacting corporate and muni borrowers already.
One of my favorite quotes from the Rumsfeld era was:
1. There are things you know that you know.
2. There are things you know that you don't know.
3. There are things you don't know, that you don't know.
Now that Uncle Sam is essentially a super duper leveraged hedge fund, let's pray our guys in the beltway are really, really smart. Based on the recent returns in the hedge fund community, their appears to be a dearth of smartiness. I would still like to believe in American exceptionalism -- but the recent turn of events has me convinced that the universe of things we don't know, that we don't know has expanded.
Allow me to chew on this some more while I bop around the Far East this Christmas for a few weeks. It always helps to get outside the bubble and see things from a fresh perspective.
In all honesty, I have no clue how this is gonna play out...
Not that stagflation or stag-deflation is better or whatever you want to call this current fiasco is. The job numbers this morning was horrendous.
The real unemployment rate is now almost 12% according to gov stats -- halfway to the 25% of the great depression…
http://www.bls.gov/news.release/empsit.t12.htm
If the capital markets don't work, main street is out of work - and that is what is happening now. Everyone takes the mechanisms of liquidity and capital flows for granted until they don't function.
Here is an e-mail question from a colleague this morning addressed to me (edited)
Put this out to the think tank and let me know the response-
We have a while to go with this deflation and decline in rates. Who knows when the economy will revive. However, when it does there could be some wicked inflation along the scale of the 1980s. I don't think this necessarily means that house prices increase, but it will mean that the cost of financing will be horrendous, ala 14% mortgage rates like home buyers had to contend with in the late 70's, early 80's. This means that the next two years could be a prime time to buy a house, i.e. low housing values along with very cheap financing (if you can get it). Let me know what the think tank says.
Do we just suffer with deflation for a decade, or does the inflation scenario kick in?
We have a while to go with this deflation and decline in rates. Who knows when the economy will revive. However, when it does there could be some wicked inflation along the scale of the 1980s. I don't think this necessarily means that house prices increase, but it will mean that the cost of financing will be horrendous, ala 14% mortgage rates like home buyers had to contend with in the late 70's, early 80's. This means that the next two years could be a prime time to buy a house, i.e. low housing values along with very cheap financing (if you can get it). Let me know what the think tank says.
Do we just suffer with deflation for a decade, or does the inflation scenario kick in?
My response:
I would tend to agree that the prime homebuying window is now (as long as you fully intend to stay put for a long time). As much as it is hard to believe that THE Numero Uno economy in the freakin' universe can face a Japan type scenario, the benchmark curve certainly is pricing one. I have to believe the flight to quality bid recedes sooner or later -- the crowding out effect is certainly impacting corporate and muni borrowers already.
One of my favorite quotes from the Rumsfeld era was:
1. There are things you know that you know.
2. There are things you know that you don't know.
3. There are things you don't know, that you don't know.
Now that Uncle Sam is essentially a super duper leveraged hedge fund, let's pray our guys in the beltway are really, really smart. Based on the recent returns in the hedge fund community, their appears to be a dearth of smartiness. I would still like to believe in American exceptionalism -- but the recent turn of events has me convinced that the universe of things we don't know, that we don't know has expanded.
Allow me to chew on this some more while I bop around the Far East this Christmas for a few weeks. It always helps to get outside the bubble and see things from a fresh perspective.
In all honesty, I have no clue how this is gonna play out...
12-06-2008, 10:56 AM
#62
Moderator Alumnus
^^^
Thanks.
Volcker is still around, so I am not so worried about stagflation
But deflation on the other hand
And your friend is probably right if Bernanke doesn't cut back on those helo drops on Wall St...
Thanks.
Volcker is still around, so I am not so worried about stagflation
But deflation on the other hand
And your friend is probably right if Bernanke doesn't cut back on those helo drops on Wall St...
12-08-2008, 05:44 AM
#63
I feel the need...
Thread Starter
Paul Volcker is back, and he warns of tough times ahead
Volcker has been chosen by President-elect Barack Obama as a special economic advisor. His 'no pain, no gain' fiscal strategy worked in the '80s, and there's no sign he's softened that philosophy.
A generation ago, Paul A. Volcker was a household name, the Federal Reserve chief who waged a hard-nosed but successful battle against virulent inflation that clouded the nation's economic future. He did it by engineering a horrific recession, clamping on the financial brakes and sending the economy into a tailspin in 1981.
Nobody knew whether his strategy would work. It certainly caused widespread pain. But by 1986, double-digit inflation was gone and price increases had dropped to about 2% annually, setting the stage for the next two decades of economic stability.
Now Volcker is back, tapped by Barack Obama as a special economic advisor. And if the president-elect follows his advice on the current economic crisis, there could be pain again and no doubt many protests -- but also the possibility of long-term benefits.
In speeches, interviews, public policy reports and congressional testimony, Volcker, 81, has laid out a fairly clear outline of what he thinks is wrong with the present-day financial system and the government's management of the economy.
His concerns go to the very core of how America lives and how Wall Street operates. A child of the Great Depression and a man of legendary personal thrift, Volcker thinks Americans have been living above their means for too long.....
Nobody knew whether his strategy would work. It certainly caused widespread pain. But by 1986, double-digit inflation was gone and price increases had dropped to about 2% annually, setting the stage for the next two decades of economic stability.
Now Volcker is back, tapped by Barack Obama as a special economic advisor. And if the president-elect follows his advice on the current economic crisis, there could be pain again and no doubt many protests -- but also the possibility of long-term benefits.
In speeches, interviews, public policy reports and congressional testimony, Volcker, 81, has laid out a fairly clear outline of what he thinks is wrong with the present-day financial system and the government's management of the economy.
His concerns go to the very core of how America lives and how Wall Street operates. A child of the Great Depression and a man of legendary personal thrift, Volcker thinks Americans have been living above their means for too long.....
12-08-2008, 06:51 PM
#64
I feel the need...
Thread Starter
Commodity Fundamentals Are ‘Unimpaired,’ Rogers Says
The fundamentals of commodities are “unimpaired” and prices will rebound when a lack of new supply leads to shortages, said Jim Rogers, chairman of Rogers Holdings.
“Commodities will be the place to be if and when we come out of” the downturn, Rogers said yesterday in an interview from Miami. “The only thing where fundamentals are unimpaired are commodities. Farmers cannot get loans for fertilizer now. Nobody can get a loan to open a zinc mine. So we are going to have some serious, serious supply problems before too much longer.”
The Reuters/Jefferies CRB Index of 19 commodities has plunged 53 percent from a record in July on concern that a global recession will sap demand for raw materials. The index almost doubled between its low in 2001 and the end of last year.
Rogers said crude oil and agricultural commodities were the most likely to have shortages and the outlook for zinc and cotton had “improved.” “I haven’t sold any commodities since the bull market began,” he said.....
“Commodities will be the place to be if and when we come out of” the downturn, Rogers said yesterday in an interview from Miami. “The only thing where fundamentals are unimpaired are commodities. Farmers cannot get loans for fertilizer now. Nobody can get a loan to open a zinc mine. So we are going to have some serious, serious supply problems before too much longer.”
The Reuters/Jefferies CRB Index of 19 commodities has plunged 53 percent from a record in July on concern that a global recession will sap demand for raw materials. The index almost doubled between its low in 2001 and the end of last year.
Rogers said crude oil and agricultural commodities were the most likely to have shortages and the outlook for zinc and cotton had “improved.” “I haven’t sold any commodities since the bull market began,” he said.....
12-09-2008, 11:27 PM
#65
Moderator Alumnus
^^^
But how long for that to occur?
But how long for that to occur?
Global oil demand will collapse next year and commodities will not return to the highs they reached this summer in the foreseeable future, two authoritative reports said on Tuesday as they forecast a long and painful worldwide recession.
The stark conclusions came as the World Bank’s chief economist predicted that the world faced “the worst recession since the Great Depression”.
“The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices,” it said, forecasting that demand would drop 50,000 barrels a day this year and a hefty 450,000 b/d in 2009. US oil demand will drop next year to the lowest level in 11 years.
Meanwhile, the World Bank’s Global Economic Prospects report said the commodities boom of the past five years – which drove up prices 130 per cent – had “come to an end”.
The World Bank’s analysis of the commodities boom contrasts with the prevalent view among natural resources companies – and most Wall Street analysts – that the ongoing price drop is a correction within an upward trend.
http://www.ft.com/cms/s/0/bcda848c-c...077b07658.html
The stark conclusions came as the World Bank’s chief economist predicted that the world faced “the worst recession since the Great Depression”.
“The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices,” it said, forecasting that demand would drop 50,000 barrels a day this year and a hefty 450,000 b/d in 2009. US oil demand will drop next year to the lowest level in 11 years.
Meanwhile, the World Bank’s Global Economic Prospects report said the commodities boom of the past five years – which drove up prices 130 per cent – had “come to an end”.
The World Bank’s analysis of the commodities boom contrasts with the prevalent view among natural resources companies – and most Wall Street analysts – that the ongoing price drop is a correction within an upward trend.
http://www.ft.com/cms/s/0/bcda848c-c...077b07658.html
12-10-2008, 06:07 PM
#66
I feel the need...
Thread Starter
Dunno exactly, but with the printing presses running hot and heavy -- unless this economy turns on a dime, the stagnation will be accompanied by teh inflation speaking strictly on dollar and bond yield terms. Have you seen 90 day t-bills -- the market is totally irrational. The Gov't is able to borrow short term, essentially for free. That cannot last.
12-10-2008, 06:08 PM
#67
I feel the need...
Thread Starter
Bernanke-Greenspan’s Fed Failed Economy, Created Bubbles
Review by James Pressley
http://www.bloomberg.com/apps/news?p...d=ajRt9Mmr24dQ
Ben Bernanke and Henry Paulson are flinging more than $8.5 trillion from their helicopters to rescue the economy.
As dollar bills fall from the skies, this might be a good time to ask how we got into this mess in the first place and how we might prevent a future crisis. George Cooper offers a cogent answer in “The Origin of Financial Crises: Central Banks, Credit Bubbles and the Efficient Market Fallacy.”
Cooper, a veteran central-bank watcher and fixed-income analyst, is a principal of Alignment Investors, a unit of London hedge fund BlueCrest Capital Management Ltd. His argument is disarmingly easy to grasp.
The U.S. Federal Reserve and other central banks follow one economic theory during an expansion and another during a contraction, he says. When things are bubbling along, they are Friedmanites who leave the market to do its thing. When they get one whiff of a slowdown, though, they turn Keynesian, rushing to stimulate the economy with rate cuts.
“As a rule we favor capitalism in an expansion and socialism in a contraction,” Cooper observes.
The upshot of this asymmetric response: Excess credit builds up, cycle after cycle, inflating asset prices into ever bigger bubbles that must, inevitably, burst. Cooper’s solution: Oblige central banks to prick bubbles early and often, before they morph into the kind of crisis now ravaging the global economy.....
As dollar bills fall from the skies, this might be a good time to ask how we got into this mess in the first place and how we might prevent a future crisis. George Cooper offers a cogent answer in “The Origin of Financial Crises: Central Banks, Credit Bubbles and the Efficient Market Fallacy.”
Cooper, a veteran central-bank watcher and fixed-income analyst, is a principal of Alignment Investors, a unit of London hedge fund BlueCrest Capital Management Ltd. His argument is disarmingly easy to grasp.
The U.S. Federal Reserve and other central banks follow one economic theory during an expansion and another during a contraction, he says. When things are bubbling along, they are Friedmanites who leave the market to do its thing. When they get one whiff of a slowdown, though, they turn Keynesian, rushing to stimulate the economy with rate cuts.
“As a rule we favor capitalism in an expansion and socialism in a contraction,” Cooper observes.
The upshot of this asymmetric response: Excess credit builds up, cycle after cycle, inflating asset prices into ever bigger bubbles that must, inevitably, burst. Cooper’s solution: Oblige central banks to prick bubbles early and often, before they morph into the kind of crisis now ravaging the global economy.....
12-11-2008, 06:19 PM
#68
I feel the need...
Thread Starter
Deflation Says Buy Bonds; Supply Flood Says Sell
Commentary by Mark Gilbert
http://www.bloomberg.com/apps/news?p...d=ayWr6HwZq0FY
The global economy is falling off a cliff, central banks are slashing policy rates, so everyone and her cat should move what’s left of their incredible shrinking cash piles into the can’t-be-beaten security of government bonds.
Except stocks are as cheap as chips and even managed to rally after last week’s Armageddon-like U.S. jobless numbers, so investors should be snapping up equities as fast as their fingers can click the buy button.
Except inflation is deader than the collateralized-debt- obligation market, prices of everything from houses to cars to Russian art are collapsing around our ears, and everybody knows you should put your nest egg into fixed-income securities now that deflation is the new black.
Except President-elect Barack Obama is poised to sign a new New Deal, French President Nicolas Sarkozy has set aside $33 billion for a “Vive la France!” sovereign wealth fund, U.K. Prime Minister Gordon Brown has belatedly remembered his tax-and- spend-spend-spend roots, and governments everywhere are building roads to nowhere and Bridges of Sighs -- all to be funded by printing stacks and stacks of government bonds.....
Except stocks are as cheap as chips and even managed to rally after last week’s Armageddon-like U.S. jobless numbers, so investors should be snapping up equities as fast as their fingers can click the buy button.
Except inflation is deader than the collateralized-debt- obligation market, prices of everything from houses to cars to Russian art are collapsing around our ears, and everybody knows you should put your nest egg into fixed-income securities now that deflation is the new black.
Except President-elect Barack Obama is poised to sign a new New Deal, French President Nicolas Sarkozy has set aside $33 billion for a “Vive la France!” sovereign wealth fund, U.K. Prime Minister Gordon Brown has belatedly remembered his tax-and- spend-spend-spend roots, and governments everywhere are building roads to nowhere and Bridges of Sighs -- all to be funded by printing stacks and stacks of government bonds.....
12-11-2008, 06:22 PM
#69
I feel the need...
Thread Starter
Treasury Bubble Talk Grows as U.S. Gets Free Money
The rally in Treasuries that pushed yields on bills below zero percent this week is adding to concerns that the $5.3 trillion market for government debt is a bubble waiting to burst.
Investors seeking safety from losses in equity and credit markets charged the Treasury zero percent interest when the government sold $30 billion of four-week bills on Dec. 9, the same day three-month bill rates turned negative for the first time since the U.S. began selling the debt in 1929. Yields on two-, 10- and 30-year securities touched record lows this month.
“Treasuries have some bubble characteristics, certainly the Treasury bill does,” said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., which oversees the world’s largest bond fund. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk?” he said in a Bloomberg Television interview yesterday.....
Investors seeking safety from losses in equity and credit markets charged the Treasury zero percent interest when the government sold $30 billion of four-week bills on Dec. 9, the same day three-month bill rates turned negative for the first time since the U.S. began selling the debt in 1929. Yields on two-, 10- and 30-year securities touched record lows this month.
“Treasuries have some bubble characteristics, certainly the Treasury bill does,” said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., which oversees the world’s largest bond fund. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk?” he said in a Bloomberg Television interview yesterday.....
12-17-2008, 10:14 AM
#70
The sizzle in the Steak
Watch that dollar drop!!!!
Watch those Commodities Rise!!!
Watch those Commodities Rise!!!
01-04-2009, 04:56 PM
#71
I feel the need...
Thread Starter
Is the Medicine Worse Than the Illness?
The world ran out of trust in 2008 -- but there is no shortage of money because the Fed is printing like mad. It's the wrong approach, with potentially dire consequences, says James Grant.
http://online.wsj.com/article/SB122973431525523215.html
It is a sorry place at which we Americans find ourselves this none-too-festive holiday season. The biggest names on Wall Street have gone to their rewards or into partnership with the U.S. Treasury. Foreigners stare wide-eyed from across the waters. A $50 billion Ponzi scheme (baited with, of all things in this age of excess, the promise of low, spuriously predictable returns)? Interest rates over which tiny Japanese rates fairly tower? Regulatory policy seemingly set by a weather vane? A Federal Reserve that can't make up its mind: Is it in the business of central banking or of central planning? And to think -- our disappointed foreign friends mutter -- all of these enormities taking place under a Republican administration.
Trust itself entered a bear market in 2008, complementing and perhaps surpassing the selloffs in stocks, mortgages and commodities. Never to be confused with angels, we humans seem to outdo ourselves when money is on the line. So it is that Bernard Madoff, supposed pillar of the community, stands accused of perpetrating one of the greatest hoaxes since John Law discovered the inflationary possibilities of paper money in the early 18th century.
Barely nudging Mr. Madoff out of the top of the news was the Federal Reserve's announcement last Tuesday that it intends to debase its own paper money.....
Trust itself entered a bear market in 2008, complementing and perhaps surpassing the selloffs in stocks, mortgages and commodities. Never to be confused with angels, we humans seem to outdo ourselves when money is on the line. So it is that Bernard Madoff, supposed pillar of the community, stands accused of perpetrating one of the greatest hoaxes since John Law discovered the inflationary possibilities of paper money in the early 18th century.
Barely nudging Mr. Madoff out of the top of the news was the Federal Reserve's announcement last Tuesday that it intends to debase its own paper money.....
01-06-2009, 03:49 AM
#72
I feel the need...
Thread Starter
What happens if the U.S. borrows too much?
The only honest answer: No one knows. For the past few decades, a number of economists, analysts and a few members of Congress have been pressing to balance the federal budget; some have called it a national security issue. During that period, the U.S. economy enjoyed one of its longest economic expansions in history — interrupted by two relatively mild recessions. The takeaway for some: Rising national debt isn’t a problem as long as the economy keeps growing at roughly the same pace......
.....Even if the bet pays off, there’s a real risk of nasty side effects. For starters, there’s only a certain amount of hard money (savings and investment) around the world for Uncle Sam to borrow. As the U.S. soaks up this cash, there’s less money for businesses to borrow and grow or for homeowners to buy houses. That forces interest rates higher — reversing the stimulus effect the Federal Reserve is trying to engineer with lower rates.
Churning out more debt also increases the amount of dollar-based investments flowing through the global financial system. It’s not exactly the same as printing dollars, but the effect is similar. As the global system is flooded with dollars — and investors start wondering how Uncle Sam is going to pay all this back — the value of the dollar falls.
If it falls a little, that’s not a bad thing — it helps U.S. exporters sell goods overseas. But if the value of the dollar falls too far, so does its purchasing power — even if demand for goods and services remains sluggish during a recession. That’s where inflation comes in. And if you have inflation in a recession, you get stagflation, the disease that left the U.S. economy and stock market in ruins throughout most of the 1970s......
.....Even if the bet pays off, there’s a real risk of nasty side effects. For starters, there’s only a certain amount of hard money (savings and investment) around the world for Uncle Sam to borrow. As the U.S. soaks up this cash, there’s less money for businesses to borrow and grow or for homeowners to buy houses. That forces interest rates higher — reversing the stimulus effect the Federal Reserve is trying to engineer with lower rates.
Churning out more debt also increases the amount of dollar-based investments flowing through the global financial system. It’s not exactly the same as printing dollars, but the effect is similar. As the global system is flooded with dollars — and investors start wondering how Uncle Sam is going to pay all this back — the value of the dollar falls.
If it falls a little, that’s not a bad thing — it helps U.S. exporters sell goods overseas. But if the value of the dollar falls too far, so does its purchasing power — even if demand for goods and services remains sluggish during a recession. That’s where inflation comes in. And if you have inflation in a recession, you get stagflation, the disease that left the U.S. economy and stock market in ruins throughout most of the 1970s......
01-12-2009, 06:58 PM
#74
I feel the need...
Thread Starter
TIPS Irresistible to Gross as Protection Is ‘Cheap’
At a time when central banks are attempting to prevent deflation, the hottest investments in the government bond market are securities that protect debt holders against rising consumer prices.
Inflation-linked debt from the U.S. to Japan returned 5.77 percent since November, including price gains and reinvested interest, compared with 1.55 percent for the government-bond market, according to indexes compiled by New York-based Merrill Lynch & Co.
Pacific Investment Management Co., Vanguard Group and Fifth Third Asset Management, which oversee a combined $1.8 trillion, are scooping up so-called linkers on speculation efforts by policy makers to reignite the global economy will lead to faster inflation than is currently priced into the securities. Yields on U.S. Treasury Inflation-Protected Securities, or TIPS, indicate almost no rise in consumer prices for the next decade.....
Inflation-linked debt from the U.S. to Japan returned 5.77 percent since November, including price gains and reinvested interest, compared with 1.55 percent for the government-bond market, according to indexes compiled by New York-based Merrill Lynch & Co.
Pacific Investment Management Co., Vanguard Group and Fifth Third Asset Management, which oversee a combined $1.8 trillion, are scooping up so-called linkers on speculation efforts by policy makers to reignite the global economy will lead to faster inflation than is currently priced into the securities. Yields on U.S. Treasury Inflation-Protected Securities, or TIPS, indicate almost no rise in consumer prices for the next decade.....
01-29-2009, 05:06 AM
#75
I feel the need...
Thread Starter
Fed Warns of Global Slowdown That Adds to U.S. Deflation Risk
Federal Reserve officials warned of a prolonged global economic slowdown that may push the U.S. to the brink of deflation.
For the first time during the credit crisis, the Federal Open Market Committee’s statement yesterday indicated concern about the worldwide economy weakening “significantly,” with “some risk” that inflation would remain below ideal rates. The Fed signaled it’s moving closer to buying long-term Treasuries and expanding its $600 billion program to buy home-finance debt.
Chairman Ben S. Bernanke and his colleagues are focused on reducing a range of long-term borrowing costs to stem the longest recession since 1982. Policy makers, concluding a two-day meeting yesterday, left their target range for the main interest rate unchanged at close to zero and reiterated rates will be “exceptionally low” for “some time.”
For the first time during the credit crisis, the Federal Open Market Committee’s statement yesterday indicated concern about the worldwide economy weakening “significantly,” with “some risk” that inflation would remain below ideal rates. The Fed signaled it’s moving closer to buying long-term Treasuries and expanding its $600 billion program to buy home-finance debt.
Chairman Ben S. Bernanke and his colleagues are focused on reducing a range of long-term borrowing costs to stem the longest recession since 1982. Policy makers, concluding a two-day meeting yesterday, left their target range for the main interest rate unchanged at close to zero and reiterated rates will be “exceptionally low” for “some time.”
Okay, let's recap the play-by-play analysis: Uncle Ben was behind the curve on the housing mess.
Will Uncle Ben be behind the curve on inflation?
Not saying hyperinflation is right around the corner, but when it does occur -- me thinks it will catch just as many folks with their pants down as the credit bubble did.
01-29-2009, 03:51 PM
#76
Race Director
iTrader: (1)
Join Date: Oct 2006
Location: Charlotte(home) /Raleigh (school), NC
Age: 35
Posts: 11,395
Likes: 0
Received 0 Likes
on
0 Posts
I heard something the other day that sounded really interesting to me. It was a debate on between commentators on the news and one of them put forth the premises that during deflation you can print money. That due to deflation you can do this and it wont affect the value of the dollar since since prices are falling. It sounded fishy to me but is their any truth to that?
01-29-2009, 06:17 PM
#77
I heard something the other day that sounded really interesting to me. It was a debate on between commentators on the news and one of them put forth the premises that during deflation you can print money. That due to deflation you can do this and it wont affect the value of the dollar since since prices are falling. It sounded fishy to me but is their any truth to that?
I could be wrong.
02-02-2009, 04:38 PM
#78
I feel the need...
Thread Starter
Treasury Real Yield at 16-Month High on Inflation Bet
For the first time since 2007, Treasury investors are betting that inflation will accelerate.
The yield on 10-year notes exceeds the consumer price index by 2.72 percentage points, the most since December 2006. The gap between two- and 10-year rates widened at the fastest pace in a year last month as traders demanded more compensation for longer-term debt. Treasury Inflation Protected Securities that signaled falling prices as recently as Nov. 20 show they will increase in the U.S. this year.
Deflation was the growing concern for investors in 2008 as government bond yields fell to historic lows in December, the Reuters/Jefferies CRB Index of commodities tumbled 53 percent since July and home prices plunged 18 percent amid a deepening recession. Now, the bond market is saying Federal Reserve interest rates at zero percent, President Barack Obama’s $819 billion planned stimulus package and $8.5 trillion of U.S. initiatives to revive credit markets will reignite inflation.....
The yield on 10-year notes exceeds the consumer price index by 2.72 percentage points, the most since December 2006. The gap between two- and 10-year rates widened at the fastest pace in a year last month as traders demanded more compensation for longer-term debt. Treasury Inflation Protected Securities that signaled falling prices as recently as Nov. 20 show they will increase in the U.S. this year.
Deflation was the growing concern for investors in 2008 as government bond yields fell to historic lows in December, the Reuters/Jefferies CRB Index of commodities tumbled 53 percent since July and home prices plunged 18 percent amid a deepening recession. Now, the bond market is saying Federal Reserve interest rates at zero percent, President Barack Obama’s $819 billion planned stimulus package and $8.5 trillion of U.S. initiatives to revive credit markets will reignite inflation.....
02-05-2009, 08:19 PM
#79
I feel the need...
Thread Starter
Treasuries Gain as Quickening Job Losses Offset Supply Concern
Treasuries rose as accelerating U.S. job losses offset concern that a record $67 billion of government debt to be sold next week will overwhelm demand.
U.S. securities due in 10 years or less gained for the first time in three days as a Labor Department report showed the number of Americans filing first-time claims for jobless benefits unexpectedly jumped last week to a 26-year high. Treasuries have lost money this year amid concern government borrowing will rise. Unemployment climbed to 7.5 percent, the U.S. is forecast to report tomorrow.
“The anticipation of tomorrow’s employment numbers is driving Treasuries,” said Raymond Remy, a 26-year trader who heads fixed income at Daiwa Securities America Inc. in New York, one of the 17 primary dealers that trade with the Federal Reserve. “Treasuries will get cheaper going into next week, but it can’t happen until the employment numbers are out. All eyes will turn toward supply after that.....”
U.S. securities due in 10 years or less gained for the first time in three days as a Labor Department report showed the number of Americans filing first-time claims for jobless benefits unexpectedly jumped last week to a 26-year high. Treasuries have lost money this year amid concern government borrowing will rise. Unemployment climbed to 7.5 percent, the U.S. is forecast to report tomorrow.
“The anticipation of tomorrow’s employment numbers is driving Treasuries,” said Raymond Remy, a 26-year trader who heads fixed income at Daiwa Securities America Inc. in New York, one of the 17 primary dealers that trade with the Federal Reserve. “Treasuries will get cheaper going into next week, but it can’t happen until the employment numbers are out. All eyes will turn toward supply after that.....”
Epic smackdown in the Octagon looming...
In one corner: Massive supply of US debt issuance.
In the other corner: The Great Recession.
Fight!
02-05-2009, 08:25 PM
#80
I feel the need...
Thread Starter
Another gem forwarded on my bberg pro message screen:
----- Original Message -----
From: xxxxxxxxxx
To: Multiple Recipients
At: 2/05 10:36:34
Yesterday, minutes from a meeting of the TBAC – Treasury Borrowing Advisory Committee – were released and they revealed some remarkable and disturbing facts that were discussed and are no doubt contributing to the weakness in the treasury markets. They suggest that between increased government spending and reduced tax receipts both corporate and personal, borrowing demands will be in the $2+ trillion range and could go way up from there with a $6+ trillion number mentioned. There was discussion of addressing these needs by possibly issuing 4, 7, 20 and even perhaps 50-year debt, seemingly to fit the needs of anyone willing to buy our debt. What is so disturbing about these thoughts and what we may be seeing right now is that the worse things get with regards to the economy, normally the fundamental that drives down rates, the more debt we need to sell and that increase in supply is what drives up rates. No wonder nothing seems to makes sense.
From: xxxxxxxxxx
To: Multiple Recipients
At: 2/05 10:36:34
Yesterday, minutes from a meeting of the TBAC – Treasury Borrowing Advisory Committee – were released and they revealed some remarkable and disturbing facts that were discussed and are no doubt contributing to the weakness in the treasury markets. They suggest that between increased government spending and reduced tax receipts both corporate and personal, borrowing demands will be in the $2+ trillion range and could go way up from there with a $6+ trillion number mentioned. There was discussion of addressing these needs by possibly issuing 4, 7, 20 and even perhaps 50-year debt, seemingly to fit the needs of anyone willing to buy our debt. What is so disturbing about these thoughts and what we may be seeing right now is that the worse things get with regards to the economy, normally the fundamental that drives down rates, the more debt we need to sell and that increase in supply is what drives up rates. No wonder nothing seems to makes sense.