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Pastimes : All Clowns Must Be Destroyed
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To: KyrosL who wrote (18382)3/16/2000 5:37:00 PM
From: pater tenebrarum  Read Replies (1) of 42523
 
KL, M3 and MZM (broadest measure of money supply) recently made new highs however. still, like i said, repos supposedly roll off faster than they are replaced. i can only imagine that the non-bank financial institutions are expanding their balance sheets rapidly once again. after all, the reserve additions lately (23 billion dollars over the last five trading days) suggest that credit demand is extremely brisk at the current funds rate, and that the Fed is more than willing to accommodate it. note that the fed funds rate traded above target today in the 5 7/8 to 5 15/16% range, which is further testament to strong credit demand. it is quite astonishing if one considers that both household and corporate debts are at both absolute as well as relative record highs (relative to income, as well as GDP).
in fact what is already a credit and asset bubble of truly historic proportions seems to be getting blown up even more.
the discontinuity in the stock market is partly a result of the giant expansion in derivative related trading strategies. so far, they have produced a lot of upside volatility and little downside problems.
one day it will be the other way around, and i agree with those that suggest that all previous crashes will look like cakewalks in comparison. lets not forget that the past two days are ample proof that computer regulated strategies mindlessly magnify and exacerbate moves in the market. this happens every time when the human element intrudes in some form, and the careful calculations begin to go wrong.
sorry for digressing...
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