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: SouthFloridaGuy who wrote (100310)	1/15/2008 3:44:41 PM
From: Cal Amari	Read Replies (2) of 306849

Monetary supply HAS more than doubled since GWB moved in the White House. Moreover, the Fed has currently opened up the discount window and loosened its collateral requirements to provide loans to big banks based on horrendously illiquid assets. As the interest rate falls, demand for dollars (compared to other currencies) and dollar-denominated assets falls as well in the eyes of foreign investors. Foreign governments (e.g., Japan, China, UK, etc.) are holding the majority of U.S. treasury debt, which is offered at auction several times a year. Recent offerings were undersubcribed by those buyers, resulting in U.S. banks being 'nudged' to pick up the slack. If you don't believe that foreigners are propping up this nation's financial system, check out the folks who have been injecting capital into the U.S. banks of late - sovereign wealth funds, at least one Saudi prince, etc. Given the amazingly generous terms (e.g., interest rate guarantees) offered by these banks desperate for capital, these foreign investors should do quite well.

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