((Interest rates and leverage are two different subjects.))
Yeah, so are mice and donuts.
((Banks were pumping out record levels of mortgages at obscene rates that nobody could afford.))
Yeah ...
((We still have a negative credit spread from FED funds to every point along the Treasury curve, which is a negative monetary policy.
Yeah ...
((Banks should stop lending their excess capital to other banks which go out and waste the capital by making stupid loans that put people into homes they can't afford.))
OK.
((However, the change in the banking system is being driven by lower interest rates and the deleveraging of high interest rate ARM loans that could not find buyers.))
Again, IMO you're addressing the the underlying undercapitalization of the banking system, but rather a strategy for reliquification of same system, carried out by the same people who have a responsibility to maintain the value of the currency.
((For all practical purposes, that part of the mortgage market no longer exists. It was wiped out by high interest rates.))
No. It was wiped out by reckless lending to people who couldn't afford to pay who were encouraged to borrow at artificially low rates of interest. You're completely putting the cart before the horse here IMO.
((On the other hand, there are intellectuals and shorts))
OK, "shorts" I'm OK with. But man I hate those "intellectuals". And for some reason, ALL the intellectuals "believe high interest rates or high taxes can protect the system from excessive behavior or strong economic growth". That is SO like them, and thanks for reminding me why I hate them so much.
((I'll go along with every forecast for interest rates put out by every fixed income expert in the world))
Well, I mean if you've got "EVERY fixed income expert in the world" on your side - who by definition most certainly are NOT intellecutals - you've got to be in good company.
((and let shorts like Doug Nolan say that this latest round of FED easing is wrong.))
OK, unless I read Doug Noland's most recent missive wrong, where does he say that the recent FED easing is wrong. The way I read Noland, he says it's probably inevitable, but largely irrelevant - a drop in the bucket as it were.
Best regards,
Glenn |
