"After 3 extraordinary,paniced interest rate cuts, the credit spreads are widening again. Auctions are being cancelled left and right. Liquidity is a big issue in the credit community."
That's because the intelligent people know that growth is going to be higher, deflation was a deception. And that inflation may be on the rise. Look around. For months we've been hearing how this new paradigm is just too good to be true. Investors have been looking for excuses to find an exit. LTCM wasn't good enough, Iraq, Iran... how far do we have to go. Create turmoil in Asia, nope. Let's go for deflation and blame it on Asia. Yeah that'll float. Get the USA Fed buying a few YEN over a short time. And sure enough you have something that sprouts wings and flies. And that's why the correction was so, or so short.
"JP Morgan reports half the profits analysts thought they would and then cannot really explain what happened. They are propping up there balance sheet with credit derivatives."
Geeeshh, Nearly all derivatives over the counter are sold to hedge funds against secured assets. How many banks actually extend derivatives trading to non secure assets. This is why the CIBC bank had problems with Oppenheimer. What little derivatives they had that was unsecured.
"The dollar is starting to dive as the Mideast and Asians are unloading."
Unloading for WHAT? British pounds {not in Euro} or the Mark? Both of which have severe economics problems, of which each are going to have more rates cuts to come. Britain is in a recession... how many years? Germany: growing unemployment?
"That fear will lead to massive gold buying."
Or not. I have no fear. But I do own a small amount of non producing gold that I would love to lend to you, several times over.
Russia is a prepetual defaultor... everyone knows it, and everyone will pay them off, again. Look to Russia in the new year claim a total tax moratorium. Thus registering all companies, and people, for better tax collection before the year 2001. All will be given grants, and refund checks to register.
Japan: Some day soon they may learn that the boom bust cycle of economics is better than deflation economics. Or not. |
