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To: NOW who wrote (73464)	2/28/2001 7:19:45 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 436258

<<well the M3, along with FNM 's balance sheet means that credit is soaring, not contracting, doesnt it?>> The simple explanation is that mortgage lending is booming due to new home buying and refinancings, while C&I lending is contracting somewhat (albeit off of a very high base): stls.frb.org Add to that some stock market refugee ClownBux moved to the rat futures-infested money markets (the better to avoid the money heaven express), and you get rising M3 WITH contracting business lending. Rather typical example of money chasing inflated assets, and avoiding the areas where it might actually do some good, as Noland might say..... EDIT: One reason for this anomaly is that the mortgages are rapidly securitized and moved off the bank's books, whereas the typical C&I loan or lease is kept on the books and therefore exposes the bank to the default risk. Clearly they will be more careful when times are tight on this sort of exposure compared to MBS's, which are destined for the nearest money market fund and don't threaten the bank's own finances (for very long)

To: NOW who wrote (73464)	2/28/2001 7:35:00 PM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 436258

the point being made by the russell reader was...in spite of an expanding money supply... as far as his conversations with chicago bankers go.... is that banks placed themselves into a reverse growth on rates position...via refinancings etc.... and that corporations for the most part, floated their own boats without them causing banks to seek out corp lending that was less than what they might have otherwise wanted...that too now coming home to haunt them in rising risk those loans will fail....hence they are shutting off the spigot.... and losing on the consumer side via re-financings.... all with an expanding M3... so it raises the question, at least in chicago, given there is truth to the email russell received, where did Al's money go... wherever it went....it's had no impact in keeping values afloat thus far.... and at best... at this point... has damaged the dollar... the results of which all are speculating will be seen sooner rather than later.... does that help?