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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 (66834)	7/25/2006 4:45:23 PM
From: UncleBigs	Read Replies (3) \| Respond to of 110194

I don't think FCB buying or M&A junk bond financed deals are the key to the credit bubble. The key to the credit bubble was free mortgage money that allowed the average Joe to speculate on housing and withdraw equity to spend in the real economy. The day to day stock market activity can be influenced by coupon passes, temporary liquidity injections, FCB's buying TIPS, etc but ultimately the real economy trumps the speculators. For example, none of this prevented UPS from blowing up.

To: russwinter who wrote (66834)	7/25/2006 4:55:51 PM
From: Mike Johnston	Respond to of 110194

It is mind boggling how this stuff always somehow gets sold, stuff that a rational player would not touch with a ten foot pole. Crony capitalism at work. Regarding Japan, they have kept talking for months and months about raising rates, but somehow cannot get to do it. One measly 25 basis point hike and there is buzz that they might pause. They have officially said that rates in Japan will be very low for a very long time. This is in fact similar to the Fed policy of "talk tough-act weak-inflation is anchored-CPI massage policy" In May/June there was a lot of jawboning about them being vigilant and tough on inflation, even planting Kudlow with a rumor of a 50 point shock. Then, the truth comes out, as the June minutes show, there was never any intention of a shock, even 25 was not a done deal as there was a lot of discussion whether it should be done or not.