Sean Mc

Bonds Priced to 2% Inflation

Bugsy,

I don't disagree with you but I find those types of comments totally destructive. As we all know, politics have become much more polarized in the last 10 years or so. By tradition, politicians campaign to the center. But nearly anyone who advances to high office at the local, state or national level is beholden to the party and special interests that have backed them throughout their careers. Therefore, politicians once in office tend toward the extremes rather than the center that represents the vast majority of the public.

When political tides change and a party regains power after years in the minority, most of their energy seems to be spent blaming their predecessors and reversing laws and policies of the previous administration. Increasingly politicians are blatantly acting as though they represent only those citizens who share their political affiliation. They act spitefully, not just toward the politicians across the aisle, but even to their own constituents who have different party affiliations. I don't think the two parties are any different in this regard. Those of us in the center have no representation in government any more. In fact, we usually end up as easy targets for both parties.

I am not a cynical person by nature. But I think this infighting has damaged our democratic process almost to the point of destruction. I do believe that this cycle can be broken but it will probably take a grass roots effort from those on both sides who are willing to truly acknowledge that we are all in this together, and are able to put themselves in the shoes of those on the other side.

On Jun 17 04:14 PM bugsy wrote:

> Obama and his people may be doing the wrong thing, but dont forget
> what the other side did to get us in this huge mess. Bush and his
> cronies were the worst in our history.

The Problem With Housing Stats

It's also worth pointing out that in a rising market the mix is inherently skewed toward the high end as people stretch as much as possible to use leverage, low rates and an upward trend in price to their advantage. In a down market, the mix is inherently skewed to the low end, which is where the best deals occur for many, many reasons.

LIBOR Shows Worst Is Yet to Come for Credit Markets

I agree with the comments above saying this was a good tutorial. However, I disagree with the prognostication for the credit markets. Central banks and government agencies, including the FDIC in the U.S., have now guaranteed all interbank loans, so there is really no risk of default. There is a 75 basis point fee for commercial banks that want the guarantee, so it is an arbitrage play for banks to borrow from the Fed at all-time low rates and lend to other banks at large spreads without risk. Furthermore, central banks are injecting equity directly into commercial banks, deleveraging them and providing a further incentive to lend. I think it is all but inevitable that the spreads are going to narrow dramatically within a couple of weeks.

Have Gold and Silver Prices Reached a Tipping Point?

Increasing the money supply does create inflation regardless of whether the money is used for spending or to pay down debt. I went to a fairly large coin dealer on Friday and they were completely out of silver and had very little gold.

Bill Gross Says 'Jump.' Will the Fed Once Again Say 'How High'?

I agree as I usually do with Bill Gross's recommendations, but I don't think it is aimed at the real problem. Extending credit eases the short-term liquidity crisis but does nothing to increase the solvency of financial institutions holding MBS. I also like Glen Hubbard's ideas on directing relief to homeowners by allowing them to refinance for 30-year fixed at 5.25%. About a year ago, Bill Gross came up with the idea of the government buying up 1 million vacant homes and knocking them down. I think he was joking but I wish he wasn't.