Ahh Canada - 2 out of 3 ain't bad Message Board

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Strategies & Market Trends : Ahh Canada - 2 out of 3 ain't bad

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To: Davy Crockett who wrote (1258)	3/18/2001 2:33:54 AM
From: Shack	Read Replies (1) of 5144

Excellent digging Pete. Done some reading have you? You must have monitor burn by now. The main point is this... the excess M3 that you are talking about is not making its way back to the capital markets. The excess liquidity that is sloshing around the world is either tied up in malinvestments or is servicing bad debt out of existing cashflows. In other words, credit kiting... borrow from Peter to pay Paul...in order to fend off Mary 100% agree. Did you think I thought otherwise? The money is not finding its way to the capital markets but would lower rates change this? That is the question and I think we may already all know the answer. Interesting points in a couple of those articles. The Gold-Eagle article talks of short-term rates being high and struggling companies not being able to afford to refinance. Even if these rates were lower, these enterprises' assets are obviously not producing enough cash flow to support themselves nor is there any hope they eventually will. My comments are a generalization of course but anecdotal evidence supports them. There is a cost to malinvestment and reckless lending and no rate cuts can stop that price from being paid. The Post article says that the rate cuts is having little effect on reported consumer confidence and consumer spending. However new home sales, continued strong car sales and expanding consumer debt levels would refute this. I think that lower rates will continue to stimulate the consumer until there are absolutely no more avenues to increase their debt. By the way, I hope AG does cut by a point. If just to alleviate anymore uncertainty over rates and to get rid of the "sufficient ambiguity" which Cush loves so much.<g> Loved all the articles Pete, thanks.

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