wixeywaxy

High Yield Corporate Spreads Decline 6%

While everyone is mentioning the increased spread, I don't see them pointing out that only effects new transactions. The holders of these junk bonds are still getting the same return and will not be marking them down to market. Of course if an institution goes bankrupt, it must then mark to market. My question is, are we making too much out of the problems. Most people aren't defaulting on their mortages, even the sub prime ones, and most institutions holding them won't fold even if they have some asset impairment. The credit crunch will pass very quickly and those foolishly selling into the hysteria are making a mistake. Vic

The Fed's Cautious Optimism Isn't Believable

Interesting to see someone telling it like it is. We are headed for stagflation thanks to GWB's following the lead of LBJ in mismanaging the economy by pursuing a fabricated war on credit. The chickens didn't come home until the Jimmy Carter days then, by passing R. Nixon, but it looks like the time table will be advanced giving the next president the coup de gras. (or however you spell it) The Fed has it's hands tied. It should be raising rates but is unable. Eventually we will need to find another Paul Volker and the pain will be far worse than it would be if Bernake would sacrifice himself for the good of the country now. (but he isn't likely to do it) Vic