Yeah, this is where it gets interesting. Deflation must not be allowed, but the Fed is powerless to raise interest rates too much to fight inflation. So a little disinflation is not something Bernanke worries about. After all, the banks are all on the low side of the interest rate swaps trade. They all are on the low and floating side of the bet and their counterparties are all on the high rate fixed side of the bet.
So then, we can't grow much. The Fed can't fight the resulting inflation with higher interest rates or LIBOR will surpass the fixed rates and the counterparties will win and the banks will go under.
So a banking crisis will certainly occur if there is a repeat of 2005-2008.
After Boston: Why U.S. Markets Are Vulnerable [View article]
Staying in the market while a slow bleed occurs is what happened after the dot com bubble. Are we there now? If so, who has the nerve to stay in the market?
When The Cost Of Sovereign Default Plunges [View article]
Serial defaulters sometimes have a good reason to default. Argentina should default if American courts back Singer. That is a no brainer. And, as Felix says, it won't hurt Argentina that much anyway.
I think Argentina should not pay anything back to anybody if the court sides with Singer. Just my opinion.
The only country that has not defaulted in the last hundred years is the US.
Ben Bernanke's Diabolical Plan To Turn Mortgage-Backed Securities Into Pristine Collateral [View article]
Thanks for responding to the article. You may be interested in this important chart, proving that Ritholz is likely right. http://bit.ly/13NrhJM
The government mortgage pools did not cause the housing bubble. The chart made me realize this, and then I read where Barry came to the same conclusion.
5 Reasons Why You Should Consider British Gambling [View article]
American Wagering was a weird company. My daughter worked there and felt emotionally abused. My daughter is happy this company took them over. I hope they cleared out the cockroaches.
Austerity Is The Key To The Eurozone Crisis [View article]
You said:
" behold the Central Banks will end up with the prize. Once this has happened there will be no regional banks left to fall back on. Every loan will flow directly from the Central Banks, and when the Fed has control over every home in the US they will suddenly devalue them, offer them to the public for pennys and they will be the hero."
Austerity Is The Key To The Eurozone Crisis [View article]
You are talking about hot money that goes in and then leaves the community. Yes, we are all concerned about that. And your judge friend has it about right.
Austerity Is The Key To The Eurozone Crisis [View article]
Yes, it is the key to bank dominance and oppression of the middle class. Prior to derivatives and demand for collateral with swaps, the middle class actually grew stronger in the USA.
Here's What Happened The Last Time The Fed Owned All Outstanding Treasuries [View article]
But the banks are making 10 year loans. They force the borrowers to take the fixed higher rate and swap for the floating rate with the lower interest rate. They make massive profits on selling this "protection".
So, they are all forcing massive demand for treasuries as collateral for these trades. The more trades, the more collateral needed.
This is different than in the past Joe, IMO. The Fed is like the mafia here. They will show no mercy and their TBTF banks will always create demand for collateral. Eventually, it would not surprise me that companies wanting loans pay the Fed for the collateral, the treasuries. Could that happen is the question.
Here's What Happened The Last Time The Fed Owned All Outstanding Treasuries [View article]
I am wondering if the Fed will unwind or choose not to unwind. The Fed controls interest rates, so why would it ever be caught in a surprise as to interest rates? The banks have all bet, in collusion with the Fed, that interest rates will stay low forever. That is why they have interest rate swaps taking the floating side of the bet at lower rates.
After Boston: Why U.S. Markets Are Vulnerable [View article]
Gold: Hedge Against Deflation [View article]
Bernstein: The Fed Will Be Behind The Curve When It's Time To Tighten [View article]
Gold: Hedge Against Deflation [View article]
So then, we can't grow much. The Fed can't fight the resulting inflation with higher interest rates or LIBOR will surpass the fixed rates and the counterparties will win and the banks will go under.
So a banking crisis will certainly occur if there is a repeat of 2005-2008.
After Boston: Why U.S. Markets Are Vulnerable [View article]
When The Cost Of Sovereign Default Plunges [View article]
I think Argentina should not pay anything back to anybody if the court sides with Singer. Just my opinion.
The only country that has not defaulted in the last hundred years is the US.
Tableau IPO: Let The Gold Rush Begin For Enterprise Software IPOs [View article]
Ben Bernanke's Diabolical Plan To Turn Mortgage-Backed Securities Into Pristine Collateral [View article]
The government mortgage pools did not cause the housing bubble. The chart made me realize this, and then I read where Barry came to the same conclusion.
5 Reasons Why You Should Consider British Gambling [View article]
Austerity Is The Key To The Eurozone Crisis [View article]
" behold the Central Banks will end up with the prize. Once this has happened there will be no regional banks left to fall back on. Every loan will flow directly from the Central Banks, and when the Fed has control over every home in the US they will suddenly devalue them, offer them to the public for pennys and they will be the hero."
That is a lot to think about Far Side!!
Austerity Is The Key To The Eurozone Crisis [View article]
Thanks. and you may want to read this; http://bit.ly/16N8ahu
Austerity Is The Key To The Eurozone Crisis [View article]
Can you elaborate, Farside?
Austerity Is The Key To The Eurozone Crisis [View article]
Here's What Happened The Last Time The Fed Owned All Outstanding Treasuries [View article]
So, they are all forcing massive demand for treasuries as collateral for these trades. The more trades, the more collateral needed.
This is different than in the past Joe, IMO. The Fed is like the mafia here. They will show no mercy and their TBTF banks will always create demand for collateral. Eventually, it would not surprise me that companies wanting loans pay the Fed for the collateral, the treasuries. Could that happen is the question.
But demand for treasuries is monumental.
Here's What Happened The Last Time The Fed Owned All Outstanding Treasuries [View article]