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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (5411)	1/18/2004 11:36:09 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

I just sense we are at the blow-off stage in terms of speculation and sentiment. Plus people are betting on a ghost, a phantom, and they are badly off side in terms of reality (similar to early 2000). The hook is in, Wall Street will distribute a few tens of billions in insider and corporate stock over the next month, the market will hit a brick wall, and break. The train wreck evidence (*) is going to mount up very quickly now (not later). One percent FF is NOT the correct solution, would be like applying leeches to bleed the patient. IMO it is not IF but WHEN this whole thing blows up, regardless of what ANYONE does at this point. That said, they can possibly but not necessarily postpone the day of reckoning by keeping credit loose for a while. Quite simply, at this stage in the insanity there is NO solution. It is too late. Seriously.... 1) If you think we can solve a debt crisis by hiking rates when so many are too dependant on short term borrowing you are just plain silly. 2) Is the status quoa going to solve it? Hah Hah 3) If Greenspan thinks he can solve this mess by offering more and more loose credit he is insane. That said, if we start unwinding rapidly as you suggest, just what do you think Greenspan will do? I am not asking you what is prudent, I am not asking you what you would do, I am asking you what you think Greenspan will do. Please think about that last paragraph for a second. I am going to up the ante on you. IMO it is now 50/50 that the next move out of the FED is a rate CUT. I am not going to argue with you about throwing fat on the fire cause you are right. I am not going to debate moral hazard cause you are right, I am not going to debate what that will do to oil or gold or whatever cause you are right. I am asking you to seriously consider what the FED has done in every crisis before, and given their statements (no matter how preposterous you think they are), what they are likely to do again. You heard it here first. Be prepared for a rate CUT if we start heavily and quickly unwinding. The $ will tank, the Euro will soar, europe will be forced to act with a rate cut of its own and it will get butt ugly. Mish