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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (3877)12/25/2003 2:50:58 PM
From: mishedlo  Read Replies (1) of 110194
 
We will see soon enough if the BOJ cares to finance a $trillion plus twin deficit on the backs of Japanese citizens and alone in 2004. Happy New Year.

Define soon enough.
IF they fail to support the US $, then we MAY see whether or not that matters 1 iota to FED Fund rates. It sure as H WILL matter to treasury rates.

In regards to the FF rate you are fighting lots of assumptions.

1) they will stop supporting the US$
2) It will happen "soon enough"
3) It will matter to Greenspan and the FED
4) The reaction from Greenspan and the FED will be big enough and/or timely enough to matter
5) That any change from Greenspan IF it comes will be of a lasting nature. If it causes a deflationary housing collapse, it will be reversed "soon enough" IMO.

Russ, those are HUGE assumptions compared to my simple assumption that rate hikes come slower OR will be smaller than the enormous hikes that are discounted by the futures markets.

Mish
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