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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Woody_Nickels who wrote (54095)	10/5/2011 4:10:09 PM
From: Robert O	Read Replies (1) \| Respond to of 95923

Here's Gross' take: seekingalpha.com ... Mr. Bernanke and the Federal Reserve want to preserve the commercial banking system and get the banking system lending again. Their policy efforts have been to flood the financial system with so much liquidity that bank failures can be handled effectively and smoothly without disrupting the whole banking system and that so much liquidity will be around that commercial banks will eventually begin to loosen up their lending again. What Gross is arguing that the banking system will not begin lending in an aggressive way with the yield curve as flat as it is, and if the flatness of the yield curve extends out to seven and eight years, very little lending will take place at all. Taking on riskier loans just does not pay in such an environment and the mis-matching of maturities produces only a minimal spread. In order to achieve competitive returns on equity, given these spreads, financial institutions would have to take on massive amounts of leverage -- something that the banks themselves don’t want to do right now and something that the regulators would not allow them to do. Mr. Gross closes by saying that Mr. Bernanke needs to be careful keeping interest rates so low and trying to “twist” the yield curve to reduce longer-term yields to the levels now seen in the short-term end of the market. The fear is that Bernanke may produce, not a “take-off,” but a crash.