John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (10547)	11/13/2008 11:47:28 AM
From: Hawkmoon	Read Replies (1) of 33421

Thanks for the response John!! I agree with much of what you wrote. I guess I'm just fixed upon what Paulson stated yesterday and why the Treasury isn't deploying capital where I perceive it might do the most good, namely suring up the CDS markets until they can get a regulatory and clearing operation fully in place. Having the Fed sell CDS contracts would net some good cash flow for them. Of course, they are taking on liabilities, but they ultimately will have them anyway if we're required to undertake a fiscal stimulus package because we permit these bonds to default (and deprive corporations of needed capital). I think it would bring down the "cost of insurance" which is fundamental to liquifying the lending industry and motivating them to loan again. It certainly would decrease the costs for insurance for the municipalities. Banks are just not going to be willing to lend so long as they perceive the collateral being offered against those loans will continue to depreciate. What say you? Hawk

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