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

To: pogohere who wrote (10821)	7/17/2008 6:34:45 PM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 50114

re:["Slider:"And now you & Hussman want me to believe that Fiat Central Bankers are fixing a liquidity crisis in the financial markets - by NOT adding liquidity - but, by actually withdrawing it? ..I don't think so."] The Fed has sacrificed 1/2 their balance sheet, opened the discount window, and created an alphabet soup of lending facilities to solve the liquidity crisis. It's no longer a liquidity crisis - it's a solvency crisis. The banks can access all the liquidity they want. The problem is that they're worried about lending to each other because they're worried about their counter-parties going broke, because there is still so much bad paper held off balance sheet, and so many losses to still write down. Before it's done, potentially a $2 Trillion dollar vaporization. As far as all the money supply charts, I appreciate everyone's points. We all know why the Fed stopped publishing M3, and we all love quoting John Williams double-digit M3 "shadow stats." But, the banks are no longer creating hyper-leveraged mountains of credit money. Quite the opposite. I don't care about the longterm trendlines in M1, M2, or reconstructed M3, and neither do the gold, currency, or stock markets. Those huge longterm explosions in money supply are there for everyone to see. But, that's already baked in the cake. Commodities exploded from January to March, and the Dollar accelerated it's collapse. The Fed put the brakes on M-2 in mid-March, and nearly to the day - gold topped, and the dollar bottomed, and that reality is clearly shown in these chart below. The Fed was expanding money supply up through March, but they've put the brakes on. Since the mid-March top in gold; gold is down, the Euro is down, the Yen is down, the Swiss Franc is down, and only the US Dollar is up. The Fed knows it must stop the carnage in the dollar, and so far they have. Don't underestimate their tools, or their creativity. They hear gold loud and clear every day, and every night Larry Kudlow reminds them about "King Dollar." They may be a lot of things, but deaf isn't one of them. Start looking at what the Fed's been doing since March, that's what driving the markets today. I've been as guilty as anyone for focusing too long, on the longterm M1, 2, and 3 charts. What the Fed did pre-March is already baked in the cake. Pay attention to what they've been doing since, and what they do going forward. And take another look at this Japanese deflation chart before you get too locked in, on how you'll trade deflation. I hope that clarifies things, SOTB

To: pogohere who wrote (10821)	7/17/2008 7:20:14 PM
From: yoremonhoj	Read Replies (2) \| Respond to of 50114

Lee Adler agrees with Slider on the Fed's recent action. I think the Fed likes the idea that so many talking heads have been reporting that the Fed is printing like mad men when in fact they are draining liquidity out. The question is will Benny keep it up if the market goes into a bigger tail spin and what happens when FCB's decide to stop treasury purchases? Fed’s Draining Ways - Professional Edition by Lee Adler, Thursday, July 17, 2008, in Money and The Fed, Professional Edition \| Permalink \|Comments (0) The Fed returned to its draining ways again on Thursday, dropping Fed supplied liquidity back to the lowest levels in 3 years. At the same time, the Treasury announced another crushing load of supply to hit the market next week. Bonds buckled in response.An update on PDCF, Discount Window Borrowings, FCB buying, and other weekly data to be released by the Fed will be posted late this evening. Click here to download complete report in pdf format (Professional Edition Subscribers). Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. Click here for more information.