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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated -- Ignore unavailable to you. Want to Upgrade?

To: benwood who wrote (89943)	5/2/2013 5:40:46 PM
From: orkrious	1 Recommendation Respond to of 119360

Great, great post. I'm sorry I can only recommend it once.

To: benwood who wrote (89943)	5/2/2013 5:52:50 PM
From: GST	Read Replies (1) \| Respond to of 119360

Ok -- now we have something to discuss. Lets assume you are correct -- what does this say about the root cause of the mess we are in and what should be done now?

To: benwood who wrote (89943)	5/2/2013 10:07:05 PM
From: Jim Fleming	2 Recommendations Read Replies (1) \| Respond to of 119360

What would happen if the Fed suddenly stopped QE? The Fed won.t stop QE suddenly, there will be indications and a tapering off. The initial reaction would be a moderate pop in rates and a sharp drop in equity prices as the fundamentals of a contracting world economy are recognized. An enormous pool of liquidity has been created which has to go somewhere in a world that is in social and political distress. The US Treasury market is the only place that has the size, liquidity and perceived safety to handle the need for preservation of capital. Interest rates will quickly resume the downward trend as capital flees the financial and social chaos of world economic slowdown. The underlying problem is that the inequitable distribution of wealth and power that has taken place over the last forty years renders the historical and textbook methodologies of dealing with economic imbalances useless. Serious inflation is impossible to manufacture if wages and incomes are capped by economics and politics. Austerity will be short lived in an already deprived majority world. Those that are expecting inflation and skyrocketing rates are in for disappointment. In 2008 when the world was becoming aware of the debt monster, I gathered what information I could on the size of world debt and dependent derivatives. Using a range of estimates as to inclusion, rate assumptions, present values, durations and scenarios, I tried to get a handle on how the debt could be managed. It became clear to me that it could not be handled under any reasonable assumptions of the future other than massive defaults. I tell friends not to worry about passing the huge debt on to their grandchildren because if their grandchildren are as smart as they think they are, they won’t pay it. Jim Fleming

To: benwood who wrote (89943)	5/2/2013 10:07:05 PM
From: Jim Fleming	2 Recommendations Read Replies (1) \| Respond to of 119360

What would happen if the Fed suddenly stopped QE? The Fed won.t stop QE suddenly, there will be indications and a tapering off. The initial reaction would be a moderate pop in rates and a sharp drop in equity prices as the fundamentals of a contracting world economy are recognized. An enormous pool of liquidity has been created which has to go somewhere in a world that is in social and political distress. The US Treasury market is the only place that has the size, liquidity and perceived safety to handle the need for preservation of capital. Interest rates will quickly resume the downward trend as capital flees the financial and social chaos of world economic slowdown. The underlying problem is that the inequitable distribution of wealth and power that has taken place over the last forty years renders the historical and textbook methodologies of dealing with economic imbalances useless. Serious inflation is impossible to manufacture if wages and incomes are capped by economics and politics. Austerity will be short lived in an already deprived majority world. Those that are expecting inflation and skyrocketing rates are in for disappointment. In 2008 when the world was becoming aware of the debt monster, I gathered what information I could on the size of world debt and dependent derivatives. Using a range of estimates as to inclusion, rate assumptions, present values, durations and scenarios, I tried to get a handle on how the debt could be managed. It became clear to me that it could not be handled under any reasonable assumptions of the future other than massive defaults. I tell friends not to worry about passing the huge debt on to their grandchildren because if their grandchildren are as smart as they think they are, they won’t pay it. Jim Fleming