<<Maybe so, but as long as FED continues to avoid the inevitable, dollar will be headed straight down. FED must either keep ff rate at 3% or, raise it to 4% immediately. As hard as it is to believe doing so will have no consequence to illiquid loans or the economy, but it will break the MECHANISM.
Pursuing the current course FED is following its Oct 1931 error in the opposite direction when they raised the discount rate during deflation. We have inflation, so they must raise the rate that emulates the functioning of the then discount rate, the ff rate, in order to break the MECHANISM.>>
So here we are a few weeks later, what you think now of the recent FED's use of new tools...the JMP/BSC deal/steal, LEH's 4B deal just to "show you shorts a lesson", and the 18B kitchen sink writedown. ..?
Did this break the MECHANISM?
On the right path or just a quick fix?
I think not...but I was short for 400 pts in my face, so WTFDIK!!! Dollar bounced...but nothing unusual..LT trend still down.
fwiw...I talked to fairly large CRE guy a few days ago...he wasn't phased a bit about this whole thing, biz as usual for him, but did say credit was getting a little tight. I was a little shocked a smart guy like him doing deals with guys like KEY and C didn't have more to say. What really blew me away was his comment on how it's just a "confidence thing" with the public and lenders....? I didn't press any further after that remark. |
