Hey, why didn't I think of that if it was so simple. Being the boss of the Fed is a no brainer. Drop rates & print more money.
Big profit taking day tomorrow for those who didn't get out today.
Why didnt I think of that if it was so simple. I shouldve went all shorts today even though some of the big caps closed near their intraday highs.
Hey, why didn't I think of that if it was so simple. Being the boss of the Fed is a no brainer. Drop rates & print more money.
Big profit taking day tomorrow for those who didn't get out today.
This will also make imports more expensive, adding to their trade deficit unless some rabid spending habits are curtailed - which would then devastate the S&P as the US is very much a consumer based economy. Some extremely difficult times ahead methinks.I don't really think the US dollar will be the reason for its stock market to collapse, if anything its going to make US exports cheaper which will be good.
Certainly the market isn't healthy, but it doesn't mean it wont go vertical.
Even the CEO of Countrywide said he feels "very bullish" about the company.His company looked like being insolvent 2 weeks ago.
A rational approach would have to let the borrowers default and have the banks fail (or suffer) so everything can be repriced again (and hurts a lot of people in the process) before the economy can go back on a "normal and stable" growth.
But they have just started to.Morgan Stanley shares have fallen 2% this morning in pre market trading from their 5.5% gain yesterday and Goldman Sach said that they will not bail out the troubled Golden Alpha fund but would shrink its size.It is now valued at $6b.down from $10b.last year.This morning's report said that its Asian tycoon investors will not be very happy.Someone has to lose and the US banks hasn't even fully announce their loses yet.
Mkts compared to that
simply just don't go down anymore
Prior to the fall of the Berlin Wall, we had two competing economic systems - central planning and market economies - and they would vie with each other. It was not clear which had the winning side. When the Berlin Wall came down, and we really looked at what amounted to an economic experiment in Germany, where two countries [had] an identical history, the same culture, it was remarkable. East Germany, which had been expected to have the average standard of living of about 75% of West Germany, indeed had half that.
And the shock was so great in the Third World, which had been playing with central planning, that without any fanfare, the shift toward market economy, especially in China, created a huge change in the world economy. It went into a seriously impressive disinflation, which brought all interest rates down, made a huge boom in the economy, a huge increase in assets.
We realized that bubbles will not run out until they essentially come to an end - you can't stop them prematurely. But what we can do, and did do, is make sure that the economy was sufficiently flexible and that the decline was absorbed in a sufficiently liquid environment.
And the recession that occurred subsequent to the dot-com boom is now very difficult to find in the revised data. In other words, we had a terrible decline in stock prices, lots of people lost huge amounts of money, but not many people lost their jobs.
The basic problem before the Cold War is we were living in fiat money economy. Fiat money, meaning an economy of paper money which, remember went off the gold standard in the 1930s, and prior to the 1930s for a couple of hundred years or more, prices were absolutely flat. Subsequent to that the price level went up many, many fold.
In fact, we now consider low inflation as good. But lower inflation is still rising prices, and so what we have got is rising prices and it has been suppressed in recent years by the global disinflationary forces, but they are coming to an end.
I don't know whether it's this year. I'm not even sure whether we're looking at it in the context of today's turmoil in the marketplace, but out there somewhere I'm reasonably certain, we're going to return to a more inflationary environment, which means that inflation premiums and long-term interest rates go up.
It means that stock prices are going to have some difficulty moving forward, and the critical instrumentality that this government has to prevent the inflationary forces from really taking hold is the central bank, but as one should remember, what Paul Volcker was subjected to when he endeavored to put the press on a highly inflationary environment, the politics, the populist politics, was awful.
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