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Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (6915)	2/15/2009 8:38:21 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 103300

Re: "Even if you're right, and you may well be," "I think the problem is much bigger than any stimulus package... this may take a very long time to turn around... voters are expecting too much, disappointment will eventually set in..." I agree with all of that. The problem FAR exceeds the stimulus bill. I expect that (in the final analysis) it's the Fed who will do the heaviest lifting --- possibly injecting into the economy as much as five or six times the amount in this stimulus bill. (They have already injected an estimated Trillion and a half or so....) They will be buying Treasury debt back at the long end of the curve (to keep long rates from rising too much), they are already buying Agency debt, CMOs, and now Asset-Backed papers of various kinds (credit card debt securitizations, etc.) As they have ALREADY pushed Fed Funds down to "ZERO to 0.25%" (which is NEGATIVE in real terms once inflation is factored in) then they are completely out of ammunition as far as interest rates go --- excepting what they will do now: directly intervene in the debt markets and buy all kinds of asset-backed papers (not just the Treasury paper, which previously was all they were allowed to buy), in an attempt to un-freeze these frozen markets where trading has evaporated. Yep... as per usual, the Fed will do the heaviest of lifting, but the rest of the government must start bailing the water out, too, or we sink beneath the waves. Once MONETARY POLICY (interest rate setting, Treasury printing) is exhausted then FISCAL POLICY (government spending, tax reductions, etc.) is all that's left in the tool kit. Or else we could all start trading bear pelts and stocking up on bullets and bottled water and jerky... I hear in Vladivostok they are already heading back to the 'bear pelts' --- since the Russian government slapped a 50% import tariff on imported (mostly Japanese and South Korean) autos, as a way to 'protect the domestic manufacturers from ruinous foreign competition' <GGG>, the locals in Russia's far East have taken to bartering again. (Same as they did in the previous Russian economic collapse.) The car dealers are running newspaper adds announcing that they 'sell cars' for barter goods... scrap metal, wood, coal, consumer items, and - yes - bear skins. Damn... How we like to see that here? :-(