The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Mike Johnston who wrote (86336)	8/21/2007 11:18:53 AM
From: MulhollandDrive	Read Replies (2) of 306849

RN 11:10 Senator Dodd - Fed, Treasury Need To Use "All Tools" To Help Markets* speaking of tools.... yes dodd you are i like gv's comments on the fed using its tools... be careful what you wish for Message 23813616 OT macro stuff..... The Fed is stuck. The credit markets are going haywire. 90 day t bills are under 3% now. Two year notes are under 4%. It isn't a case of illiquidity. There's plenty of liquidity, it is just all going toward government securities because nobody wants to take risk. Ordinarily this would be an instance that would cause the Fed to cut rates sharply. But right now, that won't make a bit of difference, because liquidity isn't the problem. And if/when the Fed cuts rates, it won't do anything at all. It won't cause the price of ANY security to change. And when that happens, when the Fed cuts rates and nothing changes, THAT would cause panic, because people would come to the realization that the financial markets have gotten out of the Fed's control. So the Fed's stuck.

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