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Cmdr Sy
Appetite 4 Destruction
The Firm.
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Posted - 2008.10.05 23:57:00 -
[1]
Edited by: Cmdr Sy on 05/10/2008 23:59:05
Stock markets tanked after the bill passed. Down to where they were when it failed first time. Check out the futures now. The market has had time to think and realised the doorstop that left the chamber is going to make everything suck. Whatever the intent was, and it no longer matters, what you got was very different.
I have a lot of thoughts about all this, but I will keep it short and simple - the banks are still insolvent and equities are a value trap. The violence in forex is stunning. LIBOR has become meaningless. Credit ratings are meaningless. GE is AAA and paid 13% on preferred. The precious little lending going on is on terms that redefine usury. There are rumours commercial paper is frozen. If so, within months goods will be piling up in warehouses with nowhere to go.
That $700bn was not spent in the US. It will not help matters in the US. The US bailed out foreign money center banks and SWFs. It is that simple. And as we are seeing this weekend, it was not even enough. Credit creation is almost over. Net, anyway. What little scope remains is insufficient to bridge the chasm of servicing existing debt. Keynesian policy has run its course to its mathematically maximum possible extent. Reciprocal bailout moves are under discussion in a number of countries, but there is little hope of agreement. The choice everywhere is the same: print or default. Edge towards the exit or break into a run. The world is sliding into a depression. What we see today is reminiscent of the attempts to restore faltering confidence in 1929.
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Cmdr Sy
Appetite 4 Destruction
The Firm.
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Posted - 2008.10.06 06:52:00 -
[2]
Edited by: Cmdr Sy on 06/10/2008 06:54:02
The above is spot on. Saying this was a choice between giving banks hundreds of billions of dollars taken out as an advance against future taxes and everyone sticking fingers in their ears shouting LALALA! and hoping it all goes away would be to confess to a lack of imagination. There were other possibilities. Regulators and legislators refused to explore them. It does not matter though, it is too late now and it was probably left too late anyway.
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Cmdr Sy
Appetite 4 Destruction
The Firm.
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Posted - 2008.10.07 19:21:00 -
[3]
Don't make this into a political thing. Excessive leverage, poor underwriting standards, fraud and corrupt regulators are problems that have plagued the last several administrations of virtually every country on the planet. This is just the deflationary reset and abuses that you get at the end of every credit expansion cycle. It transcends all systems.
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