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This afternoon I’m on Bloomberg TV, from 2:00pm to 2:20 or so discussing the Fed rescue plans, the Markets, and the creative destruction of capitalism.
Some bullet points I hope to hit:
• The policy debate between recession vs. inflation is so 2007. The more current debate is whether the Fed is pushing on a string, and if the USA is looking at a situation similar to Japan in the 1990s.
• Is the Fed’s ongoing interference in the markets positive or negative? Should some fIrms be allowed to fail — or at least get banged up enough that someone — better risk management, stronger capitalization, smarter management — is able to swoop in and buy ’em cheaper?
• Paulson’s stronger mortgage rules are not a day late, and a dollar short — they are a half decade late, a few a trillion dollars short . . .
If you are not near a TV, you can stream it. Should be fun. . .
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UPDATE March 15, 2008 6:45am
click for video
Here’s a cool new source for me: Find Internet TV.com
http://www.findinternettv.com/Video,item,3393597389.aspx
1: If it weren’t for mark to market rules, the situation would have ended up much like Japan’s crash. It could have been worse by a giant magnitude.
2: Re Paulson: Better late than never. Maybe Obama can get ahead of the curve in 2009 and figure out how to curb speculative frenzies without removing speculative risk. Maybe that will put a stopper on wild swings in oil.
3: The Fed has no realistic choice but to provide a safety net. Otherwise the stock market as a whole would resemble then Enron ESOP. See #2 above.
Nicely done, Barry. Hey! Is the sweater back?
“Maybe Obama can get ahead of the curve in 2009” You seem to have designed your entire life around disappointment.
Does any one have any ideas why the dollar is crashing today? I thought that after it rebounded on Tuesday it meant that people were a lot less fearful of an inflationary policy, but it is just plummeting now. It makes me wonder what will happen if the Fed doesn’t cut as much as anticipated.
Dollar is plunging because it’s clear we have no growth, high debt and are screwed for years to come.
Profits are down 25% from this quarter last year. That’s a big deal.
This S&P rating thing is crazy. Last night they rated ABK at negative kept the AAA but said likely to decrease the rating over the medium term.
This morning they come out and say what appears to be the housing crisis is soon over.
They don’t add up. Why? What S&P really said is that subprime writedowns are probably close to over.
In other news, the yen carry trade is dead.
Hard to imagine how we can end up like the Japanese with this much price inflation (yes, the real estate deflation, but everything else is getting more, not less expensive).
M1EK,
I’m looking for everything to bust. One of them has to give.
The Fed’s screwed next week. No matter what they do it’ll be wrong.
Japan’s deflation/low or no growth has more to do w/ demographics than anything. Even if their economy utterly quits growing in aggregate, w/ a declining population, per capita incomes can still grow.
For the US, anything less than about 2.5% aggregate real growth means people are getting poorer, because there’s more of ’em. And that’s where we are (<2.5%, by a long shot).
John, that’s why tomorrow should be really interesting. If the CPI is “worse than expected” then I see a huge down day, and if it’s better than I see a confirmation of the rally because people will think the Fed has more room to cut.
I personally think the Fed won’t cut much either way.
If they cut even 50 the dollar goes down more, gold, oil & food go up thus straining the economy anyway.
If the do cut they have to have wording that inflation is up and be hawkish. If they say nothing about inflation people think they don’t know what they are doing.
No matter how you spin it, it’s a loss. I think the Fed might not move rates at all.
I think the Fed will cut less than the 75bp expected. Too many things already in play (TAF, TSLF, etc) and it is better to save a few bps for later.
Next week will be short (Good Friday) and we have the Fed announcement, iBanks Q reports and Quadruple Witching. It will be quite a ride…
LOL no credit problem free money right?
“More than 40% of Americans plan to use the money they receive as a result of the federal government’s economic stimulus package to pay down debt or bolster their savings, a survey found. ”
I don’t think the debate on recession versus inflation is so cut and dried. Why else would everybody be hiding out in TIPS? They are the ultimate “I don’t know the answer to that one” play.
Wha? I missed The Sweater? Say it isn’t so!