It was a week of reinforcing data that saw most economic indices moving in the same directions. Merrill Lynch was the first bombshell report with their 8 billion dollar loss in the quarter. The bright spot was technology, with great results from Microsoft, Google, Apple, and other Silicon Valley companies.
It looks like we're headed for another 25 basis rate cut, which means good news for gold and commodity funds, and bad news for the dollar and American consumers.
However, there may be bigger issues looming, as new reports indicate there may be 2 million foreclosures, with a corresponding wipeout of wealth and tax base. The credit crunch hasn't been solved, and the chance of a true recession have gone up again.
As everyone knows, oil also hit record highs, with concomitant record gas prices.
And finally, the number of buyers of American dollars had it's first hard data report, and unfortunately record numbers of people are leaving the dollar. There is no longer any active strong dollar policy, and the rest of the world is routing around America, with China selling to Europe as America gets priced out of the economy.
My advice is still the same: don't save dollars - put them in gold, Euros, or commodity funds, and watch while your purchasing power increases over your neighbors who thought they were rich because their house was appraised in 2005.
Report: 2 million homes to foreclose
Gold scales 28-year peak
Oil prices shot to an all-time high above $92 a barrel
Dollar Falls to Record Low Versus Euro
Credit crunch has not been solved
Friday, October 26, 2007
Thursday, September 20, 2007
My investment strategy
Is paying off big time. As you know, I posted my intention to get out of the stock market, the US dollar, and get into gold, commodities, and foreign stocks. Gold is up from 700 to 735, oil is at 82, and the dollar is spiralling downward so that the canadian dollar is beating us. All futures are trending higher as well.
I believe again that what we've seen the last two months is just the tip of the iceberg, and that while we saw one trigger (sub-prime housing market) counteracted by the fed, there are 4-5 more triggers that won't be as easily dealt with, and that the flipside of recession is far harder to fix, and far worse for America.
It's finally hitting the main stream press, as well as the President's speeches: recession with inflation. Bush hedged his bet, said he's optimistic that the economy is fine, but you'd have to talk to an economist for the real situation.
By reducing the prime lending rate, we've staved off recession immediately, but we've dug a worse hole: inflation and decline in purchasing power of the dollar.
From the WSJ front page:
"For years, economists have warned that the US can't run up endless charges on the national credit card to cover its huge appetite for imported cars, oil, electricity, and other goods. Someday they said, the bill will come due.
It looks like someday may finally have arrived.
After 16 years during which the US mainly borrowed and bought while much of the rest of the world lent and sold, the global economy appears to be undergoing a fundamental shift."
The article then goes on to show how it will be good for exporters and sellers to foreign buyers, but the reality is our standard of living is going to decline.
The big danger is that the very things that make us money will be sold to people who do have cash. Dubai will own our ports. China will own our wheat farms. Saudi Arabia will own CBS. And when we lose our land, our factories, how do we get out of debt? By scrimping and saving again, and building up to compete against the foreign factories down the street.
Bush needs to cut spending drastically, cut tax loopholes for offshore companies, subsidies for energy companies. We need to drastically cut spending on the war in Iraq. We need to get into a recession, and restore some value to the dollar and our treasury bills. The fed needs to stop printing money, and raise interest rates to double digits (Greenspan already predicted we'll have to do so).
And us? Save save save. But if you do save, better hope inflation isn't killing your savings, and argue for a conservative federal reserve policy. Because the end of the credit card is coming, and the late fees are in the trillions.
I believe again that what we've seen the last two months is just the tip of the iceberg, and that while we saw one trigger (sub-prime housing market) counteracted by the fed, there are 4-5 more triggers that won't be as easily dealt with, and that the flipside of recession is far harder to fix, and far worse for America.
It's finally hitting the main stream press, as well as the President's speeches: recession with inflation. Bush hedged his bet, said he's optimistic that the economy is fine, but you'd have to talk to an economist for the real situation.
By reducing the prime lending rate, we've staved off recession immediately, but we've dug a worse hole: inflation and decline in purchasing power of the dollar.
From the WSJ front page:
"For years, economists have warned that the US can't run up endless charges on the national credit card to cover its huge appetite for imported cars, oil, electricity, and other goods. Someday they said, the bill will come due.
It looks like someday may finally have arrived.
After 16 years during which the US mainly borrowed and bought while much of the rest of the world lent and sold, the global economy appears to be undergoing a fundamental shift."
The article then goes on to show how it will be good for exporters and sellers to foreign buyers, but the reality is our standard of living is going to decline.
The big danger is that the very things that make us money will be sold to people who do have cash. Dubai will own our ports. China will own our wheat farms. Saudi Arabia will own CBS. And when we lose our land, our factories, how do we get out of debt? By scrimping and saving again, and building up to compete against the foreign factories down the street.
Bush needs to cut spending drastically, cut tax loopholes for offshore companies, subsidies for energy companies. We need to drastically cut spending on the war in Iraq. We need to get into a recession, and restore some value to the dollar and our treasury bills. The fed needs to stop printing money, and raise interest rates to double digits (Greenspan already predicted we'll have to do so).
And us? Save save save. But if you do save, better hope inflation isn't killing your savings, and argue for a conservative federal reserve policy. Because the end of the credit card is coming, and the late fees are in the trillions.
Sunday, September 9, 2007
The greatest tax and spender in US History: Bush
I've really been into researching our current economy and the policies of all Presidents since Johnson. Each president since Kennedy has contributed to worsening the financial worthiness of the US Government, but it turns out GW Bush is the biggest offender ever.
Most people on these boards and indeed the man on the street look only to one statistic to determine how economically effective a president is:
personal income taxation rates.
They heap scorn on those who raise rates, and lavish praise on those who cut it. "Clinton was an economic disaster, and Bush saved America! He gave me $400 back on my tax return!" I'm here to show the opposite.
It turns out there are even more important factors when determining if a president is eroding your purchasing power.
Purchasing power is much more important statistic than your dollar net worth or dollar wages. Obviously if you make 20% more in wages, but the prices of all purchases goes up 50%, you're able to purchase less and are effectively poorer. If your investments make 10% a year, and inflation is 12%, you're losing money. Yet people are bamboozled time and again when they appear to have more dollars in the bank and their purchasing power is diminished. That's why inflation is the most feared statistic among fiscal conservatives. It erodes net worth.
It's clear America is running deficits. A federal deficit, trade deficits, consumer deficits. Our actual economy is actually measured in large part by how much we consume, not how much we produce. 72% of our economy is consumer spending, which now that our savings rate has gone negative, is all consumption.
When you run a deficit, you have to borrow against your deficit. Eventually you have to save and give away something of value to the holders of your IOUs.
Our trade deficit is 800 billion every year. That means we give away, every 2 years, the value of the companies of the Dow Jones 30, to foreign investors in Saudi Arabia, China, and Europe. They now own 3 trillion more of us than we own of them. All that real capital goes out of our economy, and into the foreign economies. So things spiral over time and get worse and worse.
Bush has given the federal reserve the green light to print arbitrary amounts of new cash. That is the root of inflation. We all know Bush likes to stretch the truth on his governmental reports. He's been misrepresenting how much we've been printing, how much inflation has been rising, and how much of our economic growth is actually inflation, and not real growth. But how could they do this without economists downgrading our economy?
In 2006, Bush ordered that we would no longer publish the figures comprising M3. M3 is the total money supply, and by not publishing it, we can no longer gauge effectively how much the federal reserve is printing.
Likewish Bush's team mandated ultra-low borrowing rates. Wall Street was happy, because they knew Bush wouldn't regulate the new market for CDOs based on giving cash to unworthy credit risks, and Bush was happy because it seemed like we were creating wealth through home values. Unfortunately, wealth is only if you create something, and the value of a home is not what a past buyer paid, but what a future buyer can afford to pay. We're seeing that house of cards fold right now.
If you factor in inflation, the American stock market has actually lost money every year in the Bush administration. By ratcheting up inflation, Bush has taken away our purchasing power and still been able to say he's cut taxes, even while our dollar buys less than if we'd raised taxes and kept inflation in check.
So Bush has run America like a .com company. No real assets, lie about your revenues, and get people to buy into the business while you reap the rewards. It's my belief it's all about to unwind.
If you contrast taxation to deficit spending, let's see where the money comes from and goes to. With taxation, you tax citizens and corporations, both foreign and domestic, that do business or gain revenue in the US. You distribute that money to people in the US, to the armed forces, to the elderly and sick, and to the poor. With deficits, you float treasury bills that are bought by foreign banks and corporations, and pay them the principal and interest.
During the Clinton year, real capital was invested in the stock market. When the market tanked, it wiped out value, but it was real value and retained its original owner, although diminished. The average citizen did see a better standard of living throughout his term. During Bush's consumption-fueled term, we've hit a 46% debt or leverage ratio in stock investment, much of it from artificial wealth from housing equity. When we wipe that out, it means capital flows out of the US, and into the foreign debt holders.
So I'll put my money where my mouth is. Since I think Bush has been awful, and things will only get worse, I'm getting out of the American dollar. I'm buying ETFs (Exchange traded funds) based on gold bullion, and buying foreign stocks and foreign currencies. The british pound is at a 26 year high against the US dollar.
Those of you who believe that Bush was fiscally better than Clinton can stay in stocks, US dollars, and US Bonds. If you're right, you'll be taking my money. If I'm right, I get to have your money. And hopefully we'll end the charade of partisanship without backing it up by our cold hard dollars (or in my case, Euros).
Most people on these boards and indeed the man on the street look only to one statistic to determine how economically effective a president is:
personal income taxation rates.
They heap scorn on those who raise rates, and lavish praise on those who cut it. "Clinton was an economic disaster, and Bush saved America! He gave me $400 back on my tax return!" I'm here to show the opposite.
It turns out there are even more important factors when determining if a president is eroding your purchasing power.
Purchasing power is much more important statistic than your dollar net worth or dollar wages. Obviously if you make 20% more in wages, but the prices of all purchases goes up 50%, you're able to purchase less and are effectively poorer. If your investments make 10% a year, and inflation is 12%, you're losing money. Yet people are bamboozled time and again when they appear to have more dollars in the bank and their purchasing power is diminished. That's why inflation is the most feared statistic among fiscal conservatives. It erodes net worth.
It's clear America is running deficits. A federal deficit, trade deficits, consumer deficits. Our actual economy is actually measured in large part by how much we consume, not how much we produce. 72% of our economy is consumer spending, which now that our savings rate has gone negative, is all consumption.
When you run a deficit, you have to borrow against your deficit. Eventually you have to save and give away something of value to the holders of your IOUs.
Our trade deficit is 800 billion every year. That means we give away, every 2 years, the value of the companies of the Dow Jones 30, to foreign investors in Saudi Arabia, China, and Europe. They now own 3 trillion more of us than we own of them. All that real capital goes out of our economy, and into the foreign economies. So things spiral over time and get worse and worse.
Bush has given the federal reserve the green light to print arbitrary amounts of new cash. That is the root of inflation. We all know Bush likes to stretch the truth on his governmental reports. He's been misrepresenting how much we've been printing, how much inflation has been rising, and how much of our economic growth is actually inflation, and not real growth. But how could they do this without economists downgrading our economy?
In 2006, Bush ordered that we would no longer publish the figures comprising M3. M3 is the total money supply, and by not publishing it, we can no longer gauge effectively how much the federal reserve is printing.
Likewish Bush's team mandated ultra-low borrowing rates. Wall Street was happy, because they knew Bush wouldn't regulate the new market for CDOs based on giving cash to unworthy credit risks, and Bush was happy because it seemed like we were creating wealth through home values. Unfortunately, wealth is only if you create something, and the value of a home is not what a past buyer paid, but what a future buyer can afford to pay. We're seeing that house of cards fold right now.
If you factor in inflation, the American stock market has actually lost money every year in the Bush administration. By ratcheting up inflation, Bush has taken away our purchasing power and still been able to say he's cut taxes, even while our dollar buys less than if we'd raised taxes and kept inflation in check.
So Bush has run America like a .com company. No real assets, lie about your revenues, and get people to buy into the business while you reap the rewards. It's my belief it's all about to unwind.
If you contrast taxation to deficit spending, let's see where the money comes from and goes to. With taxation, you tax citizens and corporations, both foreign and domestic, that do business or gain revenue in the US. You distribute that money to people in the US, to the armed forces, to the elderly and sick, and to the poor. With deficits, you float treasury bills that are bought by foreign banks and corporations, and pay them the principal and interest.
During the Clinton year, real capital was invested in the stock market. When the market tanked, it wiped out value, but it was real value and retained its original owner, although diminished. The average citizen did see a better standard of living throughout his term. During Bush's consumption-fueled term, we've hit a 46% debt or leverage ratio in stock investment, much of it from artificial wealth from housing equity. When we wipe that out, it means capital flows out of the US, and into the foreign debt holders.
So I'll put my money where my mouth is. Since I think Bush has been awful, and things will only get worse, I'm getting out of the American dollar. I'm buying ETFs (Exchange traded funds) based on gold bullion, and buying foreign stocks and foreign currencies. The british pound is at a 26 year high against the US dollar.
Those of you who believe that Bush was fiscally better than Clinton can stay in stocks, US dollars, and US Bonds. If you're right, you'll be taking my money. If I'm right, I get to have your money. And hopefully we'll end the charade of partisanship without backing it up by our cold hard dollars (or in my case, Euros).
Tuesday, August 28, 2007
Confidence takes biggest hit in 2 years
So the expected fallout from the housing market, the financial market turmoil, and tightening credit shows in the trailing indicator as of today. But since we've been posting in this forum, it's no surprise.
Recession is a good and necessary thing. It refocuses priorities, clears out bad investments, and reopens people's eyes to a more realistic world view.
In addition, for those who are sitting on the sidelines with cash, lowering prices are going to improve the leverage and value of investment dollars.
Save now, watch prices fall further, and look for signs the economy is rebounding. This fall? No way. Might be next year, but this could be a multi-year correction, especially with a lame duck presidency and likely transition to a new party.
http://money.cnn.com/2007/08/28/news/economy/confidence/?postversion=2007082811
US house prices tumble at record rate
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/28/bcnusa128.xml
Recession is a good and necessary thing. It refocuses priorities, clears out bad investments, and reopens people's eyes to a more realistic world view.
In addition, for those who are sitting on the sidelines with cash, lowering prices are going to improve the leverage and value of investment dollars.
Save now, watch prices fall further, and look for signs the economy is rebounding. This fall? No way. Might be next year, but this could be a multi-year correction, especially with a lame duck presidency and likely transition to a new party.
http://money.cnn.com/2007/08/28/news/economy/confidence/?postversion=2007082811
US house prices tumble at record rate
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/28/bcnusa128.xml
Sunday, August 19, 2007
The types of investments
What does a diversified portfolio mean? What are the different vehicles for investing?
Here's a good list of 20 different types of investments. To be honest, any business contract where you give over money, goods, or services is an investment. There are certainly very esoteric derivative contracts traded among hedge funds and super rich individuals, but there's a reasonably liquid and well-known market for a good 20 types of investments.
Depending on your life situation and the market, having percentages in one or the other will be more appropriate.
I'd be happy to answer questions, although I'd have to consult with my sister (stock broker/financial advisor) or brother-in-law (bond analyst) for more esoteric questions. I'm sure Animal Mother (trader/manager) and I think Ketchup has daytraded.
American Depository Receipt (ADR)
Annuity
Closed-End Investment Fund
Collectibles
Common Stock
Convertible Security
Corporate Bond
Futures Contract
Life Insurance
The Money Market
Mortgage-Backed Securities
Municipal Bonds
Mutual Funds
Options (Stocks)
Preferred Stock
Real Estate & Property
Real Estate Investment Trusts (REITs)
Treasuries
Unit Investment Trusts (UITs)
Zero-Coupon Securities
http://www.investopedia.com/university/20_investments/
Here's a good list of 20 different types of investments. To be honest, any business contract where you give over money, goods, or services is an investment. There are certainly very esoteric derivative contracts traded among hedge funds and super rich individuals, but there's a reasonably liquid and well-known market for a good 20 types of investments.
Depending on your life situation and the market, having percentages in one or the other will be more appropriate.
I'd be happy to answer questions, although I'd have to consult with my sister (stock broker/financial advisor) or brother-in-law (bond analyst) for more esoteric questions. I'm sure Animal Mother (trader/manager) and I think Ketchup has daytraded.
American Depository Receipt (ADR)
Annuity
Closed-End Investment Fund
Collectibles
Common Stock
Convertible Security
Corporate Bond
Futures Contract
Life Insurance
The Money Market
Mortgage-Backed Securities
Municipal Bonds
Mutual Funds
Options (Stocks)
Preferred Stock
Real Estate & Property
Real Estate Investment Trusts (REITs)
Treasuries
Unit Investment Trusts (UITs)
Zero-Coupon Securities
http://www.investopedia.com/university/20_investments/
Friday, August 17, 2007
Is Bernanke an interventionist
I'd be interested to hear from people who support non-intervention even when the entire economy may enter recession/depression. Greenspan's philosophy was intervention, Bernanke's wasn't, except he's now intervened 6 times in 2 weeks, heh.
http://www.moneyweb.co.za/mw/view/mw/en/page95?oid=154890&sn=Detail
Greenspan asserted that central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, he noted, the sharp stock market break of 1987 had few negative consequences for the economy. “But we should not”, Greenspan continued, “underestimate or become complacent about the complexity of the interactions of asset markets and the economy.
“Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy”. In the current instance the Federal Reserve has intervened not because asset prices were too high, but because uncertainties in increasingly opaque credit markets pushed investor uncertainty over the edge.
So, it turns out that not just people are over leveraged, I found out that hedge funds, who now own more assets than investment banks, can typically be 20x leveraged. In other words, for the billion they own, they borrow 19 billion.
So I gather that's where a lot of the aggregate margin debt is coming from, not just individual investors.
http://www.moneyweb.co.za/mw/view/mw/en/page95?oid=154890&sn=Detail
Greenspan asserted that central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, he noted, the sharp stock market break of 1987 had few negative consequences for the economy. “But we should not”, Greenspan continued, “underestimate or become complacent about the complexity of the interactions of asset markets and the economy.
“Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy”. In the current instance the Federal Reserve has intervened not because asset prices were too high, but because uncertainties in increasingly opaque credit markets pushed investor uncertainty over the edge.
So, it turns out that not just people are over leveraged, I found out that hedge funds, who now own more assets than investment banks, can typically be 20x leveraged. In other words, for the billion they own, they borrow 19 billion.
So I gather that's where a lot of the aggregate margin debt is coming from, not just individual investors.
Historic levels of margin debt
Ugh. I was against the fed lowering the rates, because I don't believe people who assume risk should be bailed out whenever things go south. And I didn't really understand why the fed thought it important to do so today.
I still believe that, however I just read a statistic that concerns folks quite a bit. Right now aggregate margin debt as a proportion to market capitalization is at a historic high. Higher than 1929, higher than 1999-2000, higher than 1987.
Markets crash because of snowball effects, either runs on bank funds, or spiralling stock prices due to lack of buyers, or lack of liquidity from avoidance of all loan risk.
Apparently people have been taking out home equity loans or refinancing mortgages to adjustable rates and investing them in the stock markets.
The first test is going to be in September when adjustable rates on most mortgages are going to go up by 30%. If people are forced to sell stocks to make payments on their mortgages, or feel that they need to cut spending elsewhere to pay their higher mortgages, stocks will go down even more than this August. Right now, people are predicting the future, and trying to get out now, which is why stocks have crashed.
So the question is, will we see a real recession like in 2001-2003? Will this snowball take out so much with it that it depresses the global economy like 1929?
I think Bernanke's vacation's over, and he's going to have his hands full over the next 9 months. But I also think it's one of the best teams ever in charge of the fed, and they'll do everything possible to smooth out any large downswings.
http://www.discursivemonologue.com/2007/07/17/nyse-member-margin-debt-at-all-time-highs-in-both-real-and-nominal-values/
Check out this Time article from 1999 talking about the same thing. They said there could be a huge stock crash...
http://www.time.com/time/magazine/article/0,9171,991852,00.html
I still believe that, however I just read a statistic that concerns folks quite a bit. Right now aggregate margin debt as a proportion to market capitalization is at a historic high. Higher than 1929, higher than 1999-2000, higher than 1987.
Markets crash because of snowball effects, either runs on bank funds, or spiralling stock prices due to lack of buyers, or lack of liquidity from avoidance of all loan risk.
Apparently people have been taking out home equity loans or refinancing mortgages to adjustable rates and investing them in the stock markets.
The first test is going to be in September when adjustable rates on most mortgages are going to go up by 30%. If people are forced to sell stocks to make payments on their mortgages, or feel that they need to cut spending elsewhere to pay their higher mortgages, stocks will go down even more than this August. Right now, people are predicting the future, and trying to get out now, which is why stocks have crashed.
So the question is, will we see a real recession like in 2001-2003? Will this snowball take out so much with it that it depresses the global economy like 1929?
I think Bernanke's vacation's over, and he's going to have his hands full over the next 9 months. But I also think it's one of the best teams ever in charge of the fed, and they'll do everything possible to smooth out any large downswings.
http://www.discursivemonologue.com/2007/07/17/nyse-member-margin-debt-at-all-time-highs-in-both-real-and-nominal-values/
Check out this Time article from 1999 talking about the same thing. They said there could be a huge stock crash...
http://www.time.com/time/magazine/article/0,9171,991852,00.html
Friday, August 10, 2007
Hedge Funds, Subprimes, Bear Stearns and you
Talk about an interesting week. I was wrong, Bernanke and the Federal Reserve did have to intervene, although not by dropping rates. They injected 34 billion in 3 day notes into the market to weather the liquidity crisis. The emergency move can't be repeated indefinitely though, and they may have to act even before the next scheduled meeting to drop rates, even by 50 basis points.
So the artificial credit bubble that's been shoring up the consumer economy is bursting, but I'm betting Bernanke can give a reasonably soft landing. If not, you're going to see 1987 (stock crash) or 1998 (financial panic) analogue in this market.
I think Ketchup is doing some day trading on volatility, and now's a good time to get back in, at least for 1-3 weeks. I sold all my stocks last week and this week before the drop, and I'm short selling retail, financial, and discretionary goods because consumer buying power and confidence are going to nosedive in the next 12 months.
So the artificial credit bubble that's been shoring up the consumer economy is bursting, but I'm betting Bernanke can give a reasonably soft landing. If not, you're going to see 1987 (stock crash) or 1998 (financial panic) analogue in this market.
I think Ketchup is doing some day trading on volatility, and now's a good time to get back in, at least for 1-3 weeks. I sold all my stocks last week and this week before the drop, and I'm short selling retail, financial, and discretionary goods because consumer buying power and confidence are going to nosedive in the next 12 months.
Thursday, August 9, 2007
Strap on your helmets, going to be some volatility
I spent the last week moving out of the stock market into cash positions. There's a good chance this is the beginnings of a bear market and/or recession if the subprime crash spreads to other areas. Basically, easy money and incorrect risk assessments have propped up the economy for a while now, and it's starting to unravel. You can see my earlier post for a good review of the problem facing Bernanke right now, who's been doing a great job.
http://biz.yahoo.com/ap/070809/wall_street.html?.v=49
http://biz.yahoo.com/ap/070809/wall_street.html?.v=49
Stocks Fall on Rising Credit Anxiety
A move by the European Central Bank to provide more cash to money markets intensified Wall Street's angst. Although the bank's loan of more than $130 billion in overnight funds to banks at a low rate of 4 percent was intended to calm investors, Wall Street saw the step as confirmation of the credit markets' problems. It was the ECB's biggest injection ever.
The Federal Reserve added a larger-than-normal $24 billion in temporary reserves to the U.S. banking system.
The ECB's injection of money into the system is an unprecedented move, said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co., adding that it offers evidence that the problems in subprime lending are, in fact, spilling into the general economy.
"This is a mini-panic," he said. "All the things that had been denied up until this point are unraveling. On top of this, retail sales were mediocre, which shows that indeed, the housing collapse is affecting the consumer."
Wednesday, August 8, 2007
Hedge Funds, Subprimes, Bear Stearns and you
If you're willing to invest 20 minutes, this Charlie Rose video does a good job explaining the current subprime market effects upon the economy, the federal reserve, corporate debt, hedge funds and the irrelevancy of fed's rate changes, and the housing market.
http://www.charlierose.com/shows/2007/08/07/1/a-discussion-about-economics-and-the-credit-squeeze
I'll try and find an article that explains the effect of yuan revaluation and the tug of war between America and China. China's literally got 1 trillion dollars of America's securities, and they wield a considerable power over our economy.
The big question is, will the effects of the drying up of the derivative mortage packages be contained or how much spillage will there be into the housing market, the stock market, and the general economy.
I found it interesting that there's no more need for Greenspan's "put", the guarantee that he'd drop rates if the market tanked, because the hedge funds are more capitalized than the banks, and have the ability to snap up undervalued products, shoring up the bottom. Amazing.
http://www.charlierose.com/shows/2007/08/07/1/a-discussion-about-economics-and-the-credit-squeeze
I'll try and find an article that explains the effect of yuan revaluation and the tug of war between America and China. China's literally got 1 trillion dollars of America's securities, and they wield a considerable power over our economy.
The big question is, will the effects of the drying up of the derivative mortage packages be contained or how much spillage will there be into the housing market, the stock market, and the general economy.
I found it interesting that there's no more need for Greenspan's "put", the guarantee that he'd drop rates if the market tanked, because the hedge funds are more capitalized than the banks, and have the ability to snap up undervalued products, shoring up the bottom. Amazing.
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