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

To: patron_anejo_por_favor who wrote (81274)	4/28/2007 1:26:31 PM
From: Perspective	Respond to of 110194

Fed-in-a-box: somebody pointed out recently that the problem right now is that the present level of interest rates is too low to choke off the speculative bubble, but they're too high for the real economy to avoid a recession. The conclusion I draw from this is the Fed will therefore not be at all responsible for ending this bubble. It will have to collapse of its own accord. Which means that all our clever financial engineering is probably useless, and this cycle will look a lot like the cycles of old. Fed actions will be pro-cyclical instead of counter-cyclical - so any hope of this cycle being "smoothed out" by the Fed is a pipe dream. So, try to enjoy the fireworks until they burn themselves out, and then be ready for a classic credit cycle like your granddaddy knew... BC