4 replies to this topic

[pdx5]

Let's face it, the Fed (Greenspan & Co.) created the sub-priome lending fiasco
by dropping interest rates to 1%. Now the politicians want to get involved and
create more dislocations and distortions in the economy by throwing taxpayer
dollars at the sub-prime borrowers.

http://www.safehaven...rticle-7136.htm

Edited by pdx5, 13 March 2007 - 10:01 PM.

[LongShort168]

politicians are the slaves of the big companies...

Edited by fool_bush, 13 March 2007 - 10:06 PM.

[arbman]

I don't think this will repeat, please read my post here...

[arbman]

To be clear, there is no rescue for the irresponsible credit abuses, they want them to fail, period. I just listened to the Treasury Secretary Paulson's interview, he said more or less that they don't want to practically rescue the extended housing or the speculation, he thinks the rest of the economy is doing well. I agree with him, but we are moving toward a tight credit and liquidity environment for a while, there will be more correction. They are smart enough to see that too much strength from here will only bring a bigger failure eventually. It was different back in 2001-2003, it was the excessive business speculation and they had to do something drastic like moving the short term interest rates to 1%. I think it was the right move since I would take the abused credit over a deflation or collapse in any given day... I believe the politicians and the system is actually moving toward correcting the excess now, brutally. Hopefully, it will not damage the businesses too much, it is hard to think it will not for a while. I think the people will continue to overreact before the conditions gets worse and this might in fact feed into itself, we will see... The first serious rally from here will tell us a lot about how much damage there is underneath, I do not think we are very close to a strong low actually, I see at least another 30-50 SPX points to the downside here, but it might come very quick. I think the last week's rally was just a bounce, the big money wasn't interested, the firms also either sold or hedged into the bounce... - kisa

[arbman]

BTW, if you ask me how I can possibly think that the business environment is still strong, or will continue to show resilience, it is the credit spreads. The speculative (high yield) credit spreads are barely moving up. There is no way this indicator would lag such a decline for so long if the problems were going to grow exponentially. But I think the consumer spending and the sales of the big ticket items such as cars etc will be affected by the tighter credit for a while. Definitely more correction in the months ahead...