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Politics : Ask Michael Burke

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To: Knighty Tin who wrote (54274)	4/1/1999 7:31:00 PM
From: Freedom Fighter	Read Replies (1) of 132070

Mike, >>This puts the Fed in a tough position. If they don't continue to not only feed the monster they created, but feed him more, the market will crash. But, as they feed him more, bond rates go up and the dollar comes under pressure.<< I'm out of my element in a lot of these credit and short term company fundamentals discussions because my investment approach is bottom up and very long term in nature. But I find them quite stimulating. Isn't the long bond treasury market also quite leveraged? Won't a large gap between the Fed Funds rate and the long bond encourage leveraged bond purchases? It seems to me that AG is going to remain in charge of the leveraged financial system until it spills over into the real economy and manifests itself in another way. He has proven over and over again that he will provide whatever amount of liquidity it takes. Perhaps: 1. The trade deficit gets so large foreigners become less cooperative. 2. Enough of the easy money leaks into the real economy instead of assets and causes an uptick in inflation. 3. We have bad luck. 4. Earnings fall and corporate borrowing capacity for all those repurchases evaporates. 5. Other Wayne

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