Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
Posted: Thu Apr 24, 2008 8:33 pm Post subject: Re: Housing & Economic Collapse - In Progress
Quote:
DantesPeak said:
Quote:
Anyway, the Fed dollar is now 65% backed by loans and various securities and derivatives and only 35% backed by US treasuries. It's insane to think the dollar will rally in value much in these conditions.
Robert Heinlein wrote a book called “Time Enough for Love”, and in it he talks about a time early in the 21st century which he called the Crazy Years. It was a time when the irrational became the normal. Looking at the markets and peoples behavior for the last year, I would say we have arrived!
Quote:
Bloomburg: More TAF Needed
The persistence of banks' need for cash and increase in Libor rates has triggered speculation that the Federal Reserve will increase, for the third time, the amount it loans through its Term Auction Facility, which is known as TAF. The Fed has auctioned a total of $360 billion in temporary funds through TAF since its debut in December. This month, both TAF auctions were for $50 billion each in 28-day loans.
The rate at this week's TAF was 2.87 percent, or 82 basis points above the minimum bid set by the Fed, the highest spread to date. An increase in the spread signals a rise in demand for funds in the banking system.
With a spread like that, all that we can assume is that there are a lot of banks in trouble, and the FED just keeps pumping it in, and the XLF just keeps going up. It must be the effect of the Crazy Years.
Quote:
The Federal Reserve announced Wednesday it will auction an additional $75 billion in super-safe Treasury securities to big investment firms, part of an ongoing effort to help strained credit markets. The auction — the fifth of its kind — will be held Thursday.
SUPER-SAFE (catch that one, with 65% trash backing FED notes, how safe can the rest of it be)??
Joined: Dec 27, 2004 Posts: 11387 Location: Village of Idiots
Posted: Thu Apr 24, 2008 8:53 pm Post subject: Re: Housing & Economic Collapse - In Progress
hironegro wrote:
Look at the voting patterns and lifestyle choices boomers made.
Goldurn, things would have been so much better if I had JUST VOTED REPUBLICAN!
If I had only not been pretty darn poor throughout my early 20s, I'm sure things would have been even more better for the poor...
yeah! That's right! They would have been better for ME! _________________ "...powerdown so soft and fluffy you'll think you're living in a pillow..." - jboogy
Joined: Oct 23, 2004 Posts: 5201 Location: New Jersey
Posted: Thu Apr 24, 2008 9:01 pm Post subject: Re: Housing & Economic Collapse - In Progress
shortonoil wrote:
Quote:
The Federal Reserve announced Wednesday it will auction an additional $75 billion in super-safe Treasury securities to big investment firms, part of an ongoing effort to help strained credit markets. The auction — the fifth of its kind — will be held Thursday.
SUPER-SAFE (catch that one, with 65% trash backing FED notes, how safe can the rest of it be)??
About $75 billion was expiring under that program, so the 65% figure did not go up today - but it will if that other TAF progarm is increased.
It is crazy in that not very many realize, or care if they do realize, that the US dollar has little intrinsic value.
I thought the dollar may collapse in value one day, but I did not think the Fed itself would be the one who is collapsing its value. But it does make sense in a crazy way!
Anyway PIMCO does not see an end to the credit crisis:
Quote:
Why this crisis is still far from finished
By Mohamed El-Erian
Published: April 24 2008 19:24 | Last updated: April 24 2008 19:24
During the past few weeks we have seen a growing number of market participants predict an end to the dislocations that erupted last summer and claimed victims throughout the financial system and beyond. While their predictions are understandable, they are premature. The dynamics driving the disruptions are morphing and may again move ahead of both the market and policy responses.
The optimistic view is based on two distinct elements. First, that the deleveraging process is reaching its natural end as valuations stabilise and institutions come clean about their losses and raise capital; second, that a series of previously unthinkable policy responses have been effective in restoring liquidity to the financial system.
Persistent financial dislocations have now caused the real economy to become, in itself, a source of potential disruption. During the next few months there will be a reversal in the direction of causality: the unusual adverse contamination by the financial sector of the real economy is now morphing into the more common phenomenon of recessionary forces threatening to undermine the financial system.
Economic data in the US have taken a notable turn for the worse. Most importantly, the already weakening employment outlook is being further undermined by a widely diffused build-up in inventory and falling profitability. History suggests that the latter two factors lead to significant employment losses.
Pity the US consumers. Their ability to sustain spending is already challenged by the declining availability of credit, a negative wealth effect triggered by declining house values, and a lower standard of living as the result of higher energy and food prices and a depreciating dollar. Job losses will accentuate the pressures on consumers, leading to income declines and a further loss of confidence.
It is still too early for investors and policymakers to unfasten their seatbelts. Instead, they should prepare for renewed volatility.
Posted: Thu Apr 24, 2008 9:46 pm Post subject: Re: Housing & Economic Collapse - In Progress
Ludi wrote:
DAMN those baby boomers!
*kicks self and husband*
DAMN them!
(in the 80s I was in high school and college, and starting my career, busily throwing the poor overboard)
Ummm... beggin' yer pardon Ludi, but if you were in high school in the 80s, then you're a Gen Xer, not a Boomer... _________________ "It means buckle your seatbelt, Dorothy, because Kansas? Is goin' bye-bye... "
Posted: Thu Apr 24, 2008 10:10 pm Post subject: Re: Housing & Economic Collapse - In Progress
DantesPeak quoted:
Quote:
Persistent financial dislocations have now caused the real economy to become, in itself, a source of potential disruption. During the next few months there will be a reversal in the direction of causality: the unusual adverse contamination by the financial sector of the real economy is now morphing into the more common phenomenon of recessionary forces threatening to undermine the financial system.
The FED’s mono-maniacal obsession with preserving Wall Street and the now unneeded mortgage banking system has placed the entire economy in serious jeopardy. The political influence of the banking system must be unprecedented in history to have been able to convinced the FED and possibly the Treasury to commit suicide to protect their profitability.
Posted: Fri Apr 25, 2008 3:32 am Post subject: Re: Housing & Economic Collapse - In Progress
Anecdotal only but I have found a pretty wide divergence in opinions between people in london who work in fixed incomes vs equities. Basicaly on other forums when I talk about the depth and scale of this crisis the equities types seem to think I am mad and a doom mongers the two blokes who work in fixed incomes are pretty much on my side and say most of there colleagues in the city are of the same opinion.
While offering little concrete it is suggestive of why there is such a difference between the bonds and CDS markets and the stock indexes.
mark _________________ "If we lose confidence in the ability and the willingness of the Fed to deal with inflationary pressures and sustain confidence in the dollar, we'll be in trouble." Paul Volcker, May 15, 2008
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