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

To: ild who wrote (29279)	3/24/2005 12:59:32 AM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

Then would Greenspan have no choice but to invert the yield curve? Tightening liquidity sure hasn't stopped the free flow of capital available for real estate speculation so far.

To: ild who wrote (29279)	3/24/2005 1:01:46 AM
From: Taikun	Respond to of 110194

The 1.25% ARM is to Real Estate what full margin was during the tech boom. It's the same now as then, and it will end the same: From Morgan Stanley's website "…it is not obvious to me that there is a simple set of monetary policy solutions that deflate the bubble. We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it." But in the end, of course, the Fed refrained from taking any such actions, keeping margin requirements unchanged, as they had been since 1974 -- in effect, electing to sit on the sidelines as mere observers of the Great American Asset Bubble. The reluctance to make such a surgical strike on the equity market can best be summed in Greenspan’s admission, "My concern is that I am not sure what else it (raising margin requirements) will do." End of story -- beginning of the real bubble. morganstanley.com