Mr. Cynical

Credit Markets: Tanking Again?

It's always nice when we wax poetic on the nature of free markets and the evils of government intervention. How short your memory is. If the government pulled out now and left the market to its devices, the "free market," if there ever were such a thing, would very likely seize up again. Many of the same conditions which led to the freeze-up are still in place. Over-leveraging, no more securitization market, increasing stress on homeowners, etc.

What you are railing against is a deliberate attempt by the Obama administration to give the banks time to earn their way out of a big mess and avoid having to interrupt more in the marketplace. So despite the fact that what they are attempting to do is stay out of it, what you are saying is you want a government solution, you want it now and then get the hell out the way tomorrow.

Plus, the only thing that could be done now would be nationalization on a massive scale and massive debt reorg for consumers. Certainly if they did that then the criticism would really fly.

Signs of the Apocalypse in Markets?

Macro Man, I hope in your reference to populism you are referring to non-sensical anti-immigration policy in Switzerland and not populism writ large, which is exactly what this market needs. The reason the US is facing a debt downgrade is the plutocratic policy of the past 8 years. Populism may not be market friendly in the short-term, but over the long term nothing else will save us.

Macro Man wrote:

More troubling is the prospect of a populist political backlash to the crisis. Populism is generally the enemy of sensible policymaking

Uncle Ben Signals the End Game

No one answered Austrian63's question of what the unintended consequences are of the fed buying treasuries. He suggests that all debt creation is a bubble, which is not to say that it will iminently blow up in our faces.

MacroMan does not address this question in the post, either, other than to say it is a banana republic style maneuver that will lead to disaster.

If the fed borrows at 3% and loans out at 5 or 7 or 9, what is the problem?

Solve the Housing Crisis by Rewarding the Prudent

Markg....


Theoretically, no one picks up the tab. The idea is to allow homeowners to refinance their existing 6% mortgages for 4.3%. wa-la, instant lower payments for solvent households. The question is, where does the money come from to pay-off all the 6% loans? The fed would have to print, oh, I don't know, about 6 trillion dollars to do that. wa-la, rates aren't 4.3% anymore.

Context is Everything: 7 Ways to Assess the Bigger Picture

"the markets are already priced for a deflationary bust, which has not happened in this country since the 1930s."

The bears have already weighed in above, but if you like Roubini, this comment is false. Analysts still have to revise downward their profit expectations for 2009 by 20-40%.

And, yes, there are investors who still base their decisions on such things.

Also: "Attempts to value stocks based on a current quarter's or current year's earnings reflect an ignorance of what ultimately determines the value of stocks, which is a very long-range stream of future cash flows."

there are also investors (traders?) who solely base decisions on short term market trends. Ignorant, maybe, but just as ingorant are long term investors who don't watch such trends. Long term investment shouldn't mean being asleep at the wheel.

Resurrecting the Resolution Trust Corp: Will it Help?

Bend over America, the big one is coming.