8 replies to this topic

[relax]

........

[BigBadBear]

dow futures up 40 so far...on track for my target b4 his speech

[Tor]

WHAT ABOUT? THANKS.

[raleigh]

To do or not to do.

[Tor]

To do or not to do.

to do what? if he was gonna cut he would have done so. rest is decision at next fed???

[pdx5]

The sub-prime fiasco, the ensuing credit bubble, the bond ratings subterfuse, etc all are DIRECT RESULTS of Greenspans rate cuts. If Bernanke has half an ounce of brain, he will not repeat Greenspin's blunders. Also, greenspan could get away from the rate cuts because US$ was relatively speaking stronger than it is now. Further cuts will seriously erode the already sinking dollar and that is guaranteed to spike inflation. Has any economy ever prospered by adding fiat credit and bubble liquidity? I am not aware of any. It always ends very ugly. So, I am looking for just a token cut in 2007, just to soothe the frazzled nerves of the financial markets. The ARM's resets will take place as scheduled regardless of what Fed does. And even a small increase in rate adjustment will doom a lot of overextended homeowners. There is no magic solution to over-borrowing. It always ends badly. p.s. I am still long in my trading account and if rate cut is announced it will give me an exit point out of longs.

[bullshort]

The sub-prime fiasco, the ensuing credit bubble, the bond ratings
subterfuse, etc all are DIRECT RESULTS of Greenspans rate cuts.

If Bernanke has half an ounce of brain, he will not repeat Greenspin's
blunders. Also, greenspan could get away from the rate cuts because
US$ was relatively speaking stronger than it is now. Further cuts will
seriously erode the already sinking dollar and that is guaranteed to
spike inflation.

Has any economy ever prospered by adding fiat credit and bubble
liquidity? I am not aware of any. It always ends very ugly.

So, I am looking for just a token cut in 2007, just to soothe the frazzled
nerves of the financial markets. The ARM's resets will take place as
scheduled regardless of what Fed does. And even a small increase in
rate adjustment will doom a lot of overextended homeowners.

There is no magic solution to over-borrowing. It always ends badly.

p.s. I am still long in my trading account and if rate cut is announced
it will give me an exit point out of longs.

The problem is, what is the alternative? The ripple from $2 trillion worth of ARM resets, at today's short-term rates, will take down the economy. Rate cuts are baked in the cake IMHO and, as someone else said somewhere, if that means the dollar will be sacrificed, then the dollar will be sacrificed. The reality is that the issue of inflation takes a seat so far in the back as to be not even on the table. Ironically, rampant inflation may actually trigger a massive stock market rally . . . for a while. Look what happend to the Zimbabwe stock market. In the end, however, all societies in history that have relied on fiat currency have eventually collapsed. Whether it happens in our lifetimes, who knows?

[pdx5]

The sub-prime fiasco, the ensuing credit bubble, the bond ratings
subterfuse, etc all are DIRECT RESULTS of Greenspans rate cuts.

If Bernanke has half an ounce of brain, he will not repeat Greenspin's
blunders. Also, greenspan could get away from the rate cuts because
US$ was relatively speaking stronger than it is now. Further cuts will
seriously erode the already sinking dollar and that is guaranteed to
spike inflation.

Has any economy ever prospered by adding fiat credit and bubble
liquidity? I am not aware of any. It always ends very ugly.

So, I am looking for just a token cut in 2007, just to soothe the frazzled
nerves of the financial markets. The ARM's resets will take place as
scheduled regardless of what Fed does. And even a small increase in
rate adjustment will doom a lot of overextended homeowners.

There is no magic solution to over-borrowing. It always ends badly.

p.s. I am still long in my trading account and if rate cut is announced
it will give me an exit point out of longs.

The problem is, what is the alternative? The ripple from $2 trillion worth of ARM resets, at today's short-term rates, will take down the economy. Rate cuts are baked in the cake IMHO and, as someone else said somewhere, if that means the dollar will be sacrificed, then the dollar will be sacrificed. The reality is that the issue of inflation takes a seat so far in the back as to be not even on the table. Ironically, rampant inflation may actually trigger a massive stock market rally . . . for a while. Look what happend to the Zimbabwe stock market. In the end, however, all societies in history that have relied on fiat currency have eventually collapsed. Whether it happens in our lifetimes, who knows?

dear bullshort....agreed on your point that inflation may not hurt the stock market, UNLESS
it gets so high as during the 70's when LT treasuries were paying double digits. I had some of
those myself. No one can accurately predict how low the dollar will go or how high the inflation
will be.

But I have to respectfully disagree that ALL of the $2 trillion of Arm's are in danger of defaulting.
From what I have read, may be only 10% of those could default. That is $200 Billion over a stretch
of time spanning several months. These defaults if and when they happen WILL BENEFIT the buyers
of those houses, and the money they save can be put to productive use. So I am not convinced
that the entire US economy of Trillions of dollars every year will die from sub-prime fiasco. It will
be best in the long run for things to run their course. Artificial lowering of rates will build more
time bombs in the economy by encouraging speculators and foolhardy borrowers.

Personally, I am anxious to get out of my long positions and am hoping for a huge rally after
the rate cut announcement. After that I plan on laying low and work on my handicap until the
smoke clears.

Best luck on your trades!

[bullshort]

Fine that we disagree, but please don't put words in my mouth. I didn't say that "ALL of the $2 trillion in Arm's are in danger of defaulting." I said "The ripple from $2 trillion worth of ARM resets, at [based on] today's short-term [interest] rates, will take down the economy." [emphasis added]. That, of course, is my opinion, and you have yours.

Regards,Bullshort