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Politics : Welcome to Slider's Dugout

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From: Nihontochicken	3/6/2007 1:23:18 PM
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Good read by Paul McCulley of PIMCO on sub-prime implosion and likely results on the Fed and the economy. Excerpt: "It is also the case that once a speculative bubble bursts, reduced availability of credit will dominate the price of credit, even if markets and policy makers cut the price. The supply side of Ponzi credit is what matters, not the interest elasticity of demand." "This state of affairs need not produce a U.S. recession. But it does unambiguously render any given stance of Fed policy more restrictive: a tightening of credit supply based on underwriting terms means that any given policy rate will elicit reduced effective demand for credit. And that's the stuff of seriously easier monetary policy to come." pimco.com or tinyurl.com Fed to cut, so will easier money or a recession have a greater effect on the POG??? NC

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