16 replies to this topic

[nimblebear]

According to a report in the Chicago Tribune, the percentage of low grade, and speculative loans getting in trouble has been increasing at a concerning rate. This in spite of a great economy. Many US companies have been continuing to get their credit ratings downgraded. What happens if the economy slows its growth, even if modest ? (i.e. like todays GDP report would suggest.) And then if they get pressured by inflation ? Better check the foundation before you add that new second story.

Edited by nimblebear, 27 April 2007 - 10:33 AM.

[Mtrader]

More bad news? FED got to do more to prime the pump. Money continue to go to the stock market, the most liquid in the world. TO THE MOON BABY.

[PorkLoin]

Nimblebear: What happens if the economy slows its growth, even if modest ? (i.e. like todays GDP report would suggest.) And then if they get pressured by inflation?

I simply do not believe that the Fed and the gov't are going to accept much of an economic slowdown, if they have anything to say and do about it, versus increasing debt/cutting interest rates, even at the cost of further Dollar declines and Dollar cost inflation.

Wasn't one of the Fed's primary reasons for existing, in the beginning, "to defend the value of the US Dollar"? How'd they do?

Of course I could be wrong, but if it's choosing between inflating and deflation, then I say the gov't is gonna go with continuing to blow the balloon up.

Doug

[johnmc]

Nimblebear: What happens if the economy slows its growth, even if modest ? (i.e. like todays GDP report would suggest.) And then if they get pressured by inflation?

I simply do not believe that the Fed and the gov't are going to accept much of an economic slowdown, if they have anything to say and do about it, versus increasing debt/cutting interest rates, even at the cost of further Dollar declines and Dollar cost inflation.

Wasn't one of the Fed's primary reasons for existing, in the beginning, "to defend the value of the US Dollar"? How'd they do?

Of course I could be wrong, but if it's choosing between inflating and deflation, then I say the gov't is gonna go with continuing to blow the balloon up.

Doug

I agree 100%. as long as Paulson is heading the PPT any intermediate selloff will be met with unlimited repos. I can see Japan cutting their interest rates at any sign of slowdown. Not just to the moon, to the outer edges of the comos. Next generation can clean up our mess!!

[pdx5]

I get the feeling some people believe that the Federal Reserve Bank has UNLIMITED power to print money. From everything I have read on this subject, the correct answer is...not true! First of all, the congress decides and the president signs off on how much deficit spending is authorized. With the mountain of National debt already on the books, and the cost of servicing the debt every year is at or near record levels already. If this trend continues for 5 years, we will be spending more on interest payments than defense! The fed has the power to loan money to banks. However these are not gifts, they are loans which have to be paid back with interest! The banks need customers willing and ABLE and credit worthy to be able to borrow and pay the loans back. This game works great when economy is expanding and more liquidity is needed to fuel the expansion. However when and if the economy slows down, the leveraged debt acts as an accelerant in the decline. Also hampering the Fed currently in their ability to boost the sagging housing is the weak dollar. They would love to drop the interest rates if dollar was not near record lows. If dollar sags below 80, it could then collapse rapidly towards 70. Imagine what will that do to inflation with all those imports we keep buying. If the dollar declines further, which foreigners will be anxious to buy US treasuries with a declining principal? It is gonna be a very interesting 2007. Stay tuned!

Edited by pdx5, 27 April 2007 - 11:20 AM.

[da_cheif]

Nimblebear: What happens if the economy slows its growth, even if modest ? (i.e. like todays GDP report would suggest.) And then if they get pressured by inflation?

I simply do not believe that the Fed and the gov't are going to accept much of an economic slowdown, if they have anything to say and do about it, versus increasing debt/cutting interest rates, even at the cost of further Dollar declines and Dollar cost inflation.

Wasn't one of the Fed's primary reasons for existing, in the beginning, "to defend the value of the US Dollar"? How'd they do?

Of course I could be wrong, but if it's choosing between inflating and deflation, then I say the gov't is gonna go with continuing to blow the balloon up.

Doug

I agree 100%. as long as Paulson is heading the PPT any intermediate selloff will be met with unlimited repos. I can see Japan cutting their interest rates at any sign of slowdown. Not just to the moon, to the outer edges of the comos. Next generation can clean up our mess!!

" next gen can clean up our mess"????.....the last generation left it to your generation to clean up the old mess......so why did you just make a bigger mess???

[johnmc]

Nimblebear: What happens if the economy slows its growth, even if modest ? (i.e. like todays GDP report would suggest.) And then if they get pressured by inflation?

I simply do not believe that the Fed and the gov't are going to accept much of an economic slowdown, if they have anything to say and do about it, versus increasing debt/cutting interest rates, even at the cost of further Dollar declines and Dollar cost inflation.

Wasn't one of the Fed's primary reasons for existing, in the beginning, "to defend the value of the US Dollar"? How'd they do?

Of course I could be wrong, but if it's choosing between inflating and deflation, then I say the gov't is gonna go with continuing to blow the balloon up.

Doug

I agree 100%. as long as Paulson is heading the PPT any intermediate selloff will be met with unlimited repos. I can see Japan cutting their interest rates at any sign of slowdown. Not just to the moon, to the outer edges of the comos. Next generation can clean up our mess!!

" next gen can clean up our mess"????.....the last generation left it to your generation to clean up the old mess......so why did you just make a bigger mess???

I agree, the Fed only knows one trick, and that is massive liquidity. Wish I knew the date when the music stops!

[Mr Dev]

Well since the FED has become a topic of interest again,...

... I'm surprise there wasn't more interest is what I think was the

LARGEST 1 day CASH MOVEMENT by the Fed's I have ever seen.....esp on a Wednesday !!

Now up until last Wed. I had seen the usually high Thursday's go upward into the HIGH twenty-eight to
tenty-nine BILLION ONLY a few times.....EVER!

BUT....... as you can see last Wed. when the market headed lower in the morning ....allowing me to exit my

shorts at even to a small gain on the RUT..... the FED started pumping,..and when it was done they had went three times that day!

The market rally and Break Out ... well it was Spectacular and off the charts,...

.... just like the Fed Money Pumping CHART below!


April 25th
..Exited the short RUT this morning took 50% to the Long side. There may be other plans for the 50% in cash.

My st Rut Indicator is setting up,...what is a very bullish pattern ... this combined with todays liquidity situation and

what looks to be some extra support here from the fed... and it is just to dangerous for me to remain short today

April 25th FED am post

Edited by Mr Dev, 27 April 2007 - 12:07 PM.

[SandStorm]

Hedge funds = "banks" of the 21th century = music goes on and on and on . . . Not sure if they are reckless but they are certainly not conservative lenders. One of their best customers was New Century Financial . . .

[Mtrader]

There were 4 years of great time for the subprime lenders. So I assume another 4 years of great time for Hedge fund. The FED has said that the risk is balance with hedge fund. Isn't that an advocate for more hedge fund? 30K by then. Move baby move.