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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Cogito Ergo Sum who wrote (44013)	12/17/2008 1:46:07 PM
From: carranza2	Read Replies (2) \| Respond to of 217679

Well, from a simplistic standpoint, it stands to reason that the government's funding needs caused by the serial bailouts and the stimulus package Obama intends will result in lots of Treasury instruments being sold thereby increasing their pay-out. Moreover, it also stands to reason that the inordinately low interest rates - they are at an all-time low! - will revert to mean. Could it be as simple as that?

To: Cogito Ergo Sum who wrote (44013)	12/17/2008 2:01:05 PM
From: elmatador	Respond to of 217679

Origins The roots of the credit crisis stretch back to another notable boom-and-bust: the tech bubble of the late 1990’s. When the stock market began a steep decline in 2000 and the nation slipped into recession the next year, the Federal Reserve sharply lowered interest rates to limit the economic damage. Lower interest rates make mortgage payments cheaper, and demand for homes began to rise, sending prices up. In addition, millions of homeowners took advantage of the rate drop to refinance their existing mortgages. As the industry ramped up, the quality of the mortgages went down. And turn sour they did, when home buyers had to leverage themselves to the hilt to make a purchase. Default and delinquency rates began to rise in 2006, but the pace of lending did not slow. Banks and other investors had devised a plethora of complex financial instruments to slice up and resell the mortgage-backed securities and to hedge against any risks — or so they thought. topics.nytimes.com NOTE: The money that overflow to emerging markets was enough for them to pay their debts well in advance. On top of the they accummulated reserves. They grew well above historic average. Imagine the overflow that will take place in the coming years as this money has no takers in the OECD countries. It will flow into emerging markets to a scale never before imagined! I am waiting for this money to be moved to emerging markets where it will be capitalized in real assets.