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Smash the Presses Before Ben Bernanke Starts Printing

RolandTD20KdrummerRolandTD20Kdrummer Posts: 13,066
edited March 2008 in A Moving Train
http://www.inteldaily.com/?c=139&a=5460
Progress is not made by everyone joining some new fad,
and reveling in it's loyalty. It's made by forming coalitions
over specific principles, goals, and policies.

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Comments

  • LikeAnOpeningBandForTheSunLikeAnOpeningBandForTheSun Posts: 6,097
    interesting article.

    "We are no longer a capitalist society and have not been one for some years now. We are an interest-rate dependent consumer society and the sole, wheezing, smoking engine left to support that house of cards is consumer confidence."
  • DriftingByTheStormDriftingByTheStorm Posts: 8,684
    Regarding the $200 billion mortgage swap at Term Auction, that is one HELL of a policy change.

    Turning 30 year mortgages into 2 month securities,
    which is (in reality) turning a house in to cash, is one hell of a magicians trick.

    How much sense does this make?
    You want a house, but you have no money.
    You ask the bank, "Hey, can you pay the seller for me?"
    The bank says, "sure thing", and pays for the value of the house, writing a check to the seller.

    Then, the bank turns around, goes to the government and says, hey, i just PAID the value of that house to the seller, and i'll get paid back in 30 years. In the mean time, will you give me the value in full now, in NEW cash?

    So. To buy your house, the bank released existing (or possibly newly issued, given total banking reserves are negative right now, who really knows) money out in to the system to pay for your house, then turned around and created DOUBLE that by getting 100% in new funds.

    What sense does that make?
    Buy a house, inflate the currency?
    ???

    I don't know.
    I do know the announcement made the markets go relatively nuts, as you could guess.

    However, the futures are now hanging on desperately trying to stay abouve that all important 12,000dow\1,300sp number.

    :D

    Oh also.
    This whole "arangement" hinges on the banks being able to turn this swap around in 28 days in to market loans.
    Loans to the consumer (business or private entity) are ultimately the ONLY way new money gets issued, and as best measure of indicators can provide, the American people are already loaded with debt to the teeth.

    You can lead a horse to water, but you can't make it swim.
    If I was to smile and I held out my hand
    If I opened it now would you not understand?
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