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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 (50753)	1/22/2006 1:44:02 PM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

"If the monetary authorities try to print money to buy those distressed securities, it may end up going into new unexpected places, and not at all where they want it" Perhaps long term treasuries blow up along with California real estate and big cap US stocks to be replaced by gold, Euro's and oil patch RE?

To: russwinter who wrote (50753)	1/22/2006 2:31:54 PM
From: orkrious	Respond to of 110194

junk spreads going back to last august idorfman.com

To: russwinter who wrote (50753)	1/22/2006 2:47:56 PM
From: kris b	Respond to of 110194

The truth is that liquidity, the only significant weapon remaining in the central bank's arsenal as decision making moves to the markets, will not necessarily go where you want it to go when you need it to go there." --Martin Meyer in "The Fed" Or new, FED generated liquidity might go to pay off the old debt which in turn gets cancelled, adding to a liquidity crunch/contraction. Debt goes to money heaven too.

To: russwinter who wrote (50753)	1/22/2006 4:20:08 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

You need to make a distinction here. When the credit revulsion occurs in the ABS+MBS=hedgies leveraged plays, capital will blow out of those, and the value of those securities will go to money heaven. If the hedgies are leveraged into commodities those price will blow up as well. So you could see capital and fictitious values destroyed. If the monetary authorities try to print money to buy those distressed securities, it may end up going into new unexpected places, and not at all where they want it. Like goods or just plain cash? Damn are we in agreement on more and more stuff. Money going to credit heaven is going to cause a huge revaluation in all kinds of assets. It could easily downward spiral. Bingo on where the money goes to if the FED tries to intervene. It might go into gold or silver and not into housing. The worst possible scenario for them IMO. "into cash" Wow Russ that is the mish delfation scenario 100%. Of course you want to see it first but you are outlining the deflation scenario today in spades. Mish

To: russwinter who wrote (50753)	1/23/2006 12:58:57 AM
From: bond_bubble	Respond to of 110194

I think, when the credit blows, there will be a recession. Because of this, the govt will try to spend its way out. We need to figure out what this will be to gauge where the money flows. If govt spends on roads or destroying and rebuilding govt buildings, or in increasing military size, then commodities will be in very high demand - so the money flows into commodity. This is what I've been presenting for some time (i.e PPI remains high and because of this more lay off as poor unemployed people can only buy (demand increase) at very low price - hence deflation). So all the FED money goes into commodities. What happens if govt spends on research organizations (on R&D), universal healthcare, moon project etc which are not commodity intensive but more of service oriented? Can this happen? But all of these will only employ educated (in those specific fields) and these "educated guys" can get good salary from govt (and this spending could keep the CPI above what is required to stoke demand) whilst the unemployed will be getting very badly screwed. Is there a way, govt can spend on services that does NOT consume huge commodities? I dont think this is possible, because, eventually, everyone in service industry will have to spend into commodities.