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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: RonMerks who wrote (8740)	3/26/2008 1:28:24 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 50659

Ron You might want to take a very hard look at this link. Message 24407892 I'm not sure what happened to the link to blownmortgage but it is an eye opening presentation. You could also try calculatedrisk.blogspot.com

To: RonMerks who wrote (8740)	3/26/2008 1:39:51 PM
From: Chaka	Respond to of 50659

And thats why I dont understand all this talk about DEFLATION! Bernanke has devoted his life to studying the deflation of the great depression and how to prevent it. Sure, he has researched it academically but, as I am sure he will gladly admit after the last few months, theory and reality often diverge. There were policy mistakes made in the 1930s but it was not because the Fed then were idiots. For example, you might want to read: Why Did the Fed Raise Rates in October 1931? web-xp2a-pws.ntrs.com Sure the Fed can inflate away as long as "long-term inflation expectations remain anchored". A crisis (e.g. a sudden dollar plunge) can easily snowball into run-away inflation and the Fed will be forced to raise interest rates just as the Fed did in 1931. Note that I am not saying that the Fed will raise interest rates or that we are going to end up with 1930s style depression. All I am disputing is the pervasive magical belief/faith in the Fed. The Fed has its role in a crisis (such as what happened with BSC) but as a panacea to what ails the financial world today, not even close...

To: RonMerks who wrote (8740)	3/26/2008 1:50:18 PM
From: jim_p	Respond to of 50659

On your side I’ll have to admit that the Fed is doing a very aggressive job so far. On the negative side the EU is doing a very poor job so far and closer to what Japan did at the start of their problems. This is a global problem and not just a US problem. Japan is probably a bad example to follow because of the way it was handled, but there are other examples in history that are pretty comparable to our credit/real estate bubble. The biggest negative factor that no one seems to talk about is the process of going from extreme leverage to extreme under leverage. We are still in the first year of the de-leveraging process and it will be very long and very painful. Also don’t forget that the fed’s ability to inflate its way out of this problem is limited by the risk of a collapsing USD. Jim