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To: Perspective who wrote (241104)	5/16/2003 12:26:06 PM
From: zonder	Read Replies (2) \| Respond to of 436258

How do you see things behaving vs. the quasistationary analysis? Not sure. What on earth is a "quasistationary analysis"? (I am not a native speaker of English. Be nice to me :-) It sounds like you think the pricing adjustment won't be equal to the devaluation, which I would support I am saying inflation will lag and might have problem catching up. That implies, however, that somebody is getting squeezed. I submit that somebody is corporate America Obviously. how do you think this impacts different asset classes? impact on bonds will be negative as the Fed will see to it that the holders are indeed paid back in devalued dollars. Of course. What other dollars are there anyway? Corporate bonds might be interesting, since this low interest environment is helping companies restructure their balance sheets and that is a Good Thing for bondholders. T-bills on the other hand are toast. I don't understand why someone would want to be invested in government bonds at this time - currency diving and all that, but most importantly, does nobody notice they are being offered negative real interest rates and that interest rates will not stay this low forever? Imho, Fed is pumping fears of deflation despite inflation data to the contrary, in order to keep the interest rates artificially low. They would hate to see the credit bubble pop...

To: Perspective who wrote (241104)	5/16/2003 12:45:26 PM
From: ild	Respond to of 436258

Why Does Fed Chairman Greenspan Have To Keep Interest Rates Low? May 15, 2003 northerntrust.com

To: Perspective who wrote (241104)	5/16/2003 12:46:11 PM
From: SGJ	Read Replies (1) \| Respond to of 436258

<<<If and when it (the FED)is successful in reflationary efforts, who exactly in their right minds would be willing to step up and buy a long bond from the government at negative interest rates?>> They will

To: Perspective who wrote (241104)	5/18/2003 7:14:43 AM
From: Earlie	Read Replies (2) \| Respond to of 436258

BC: "Painted into a corner" says it all. And what some folks don't always realize is that "unintended consequences" is often Murphy's favourite weapon. The Fed, in its brilliance, decides to (yet again) pump massive liquidity into the system to counteract the slowing economy. On the surface, this looks like an acceptable way to keep the boilers at full pressure, but the foreigners are not pleased, savers are smacked for being good guys and the buck comes under selling pressure. Now what? Not that any of us really know what comes next, but we can certainly speculate. At this end, most of the examined sheep entrails suggest that J4P is reaching debt saturation limits and is pulling in his horns. Corporations are likewise "cutting back" so "pushing on a string" appears to be making a comeback. Unfortunately, this is taking place even as the buck gets squished. But of course, we can never have another depression over here..... the government would simply never allow it. And let's take a look at just a single "Oh, my" emanating from this Fed-inspired scene. A couple of years ago, an inordinate number of US corporations "took advantage" of lower European interest rates by borrowing overseas. Those loans were converted to bucks (which kept upward pressure on the dollar) and were brought back to America, where they were used for "general corporate purposes". Now, many of these loans are coming due and must now be repaid in Euros. Not nice. The total value of those loans has just mushroomed in total dollar value and the process of repayment (which requires conversion of bucks to Euros) just adds to the downward pressure being felt by the staggering greenback. Of course corporations caught in this trap have just added another item to an already long list of things that will keep their reported profits in the mud. Oops, I forgot.... there is always "net profits" or "Pro-forma profits" to keep this from bothering the sheep. (g) Best, Earlie