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View Full Version : Ol' Fed's doing some money swapping


DrEast
09-18-2008, 02:48 PM
And giving me flashbacks to the U.S.S.R.'s central bank's closing days, when everyone involved was desperate to get rich in other currencies while their own system collapsed around them.

But I'm sure it's just a coincidence.

In the meanwhile, Wall Street is reacting well to the news, apparently, jumping up a bit on all the various indexes. Apparently people can't remember all the way back to TWO DAYS AGO, when Dowdaq ended in the green between Black Monday and Black Wednesday. So, who else is thinking that this latest umpty-billion dollar debacle by the Fed will have more or less the same effect as the last few umpty-billion dollar debacles have? In other words, Dow etc.'s headed deep red soon, tomorrow if it follows the patterns it has, and we get to watch our government run around like chickens etc. while both major candidates claim that they can fix a problem they're both heavily invested in.

That's the fun part. The sad part is that nobody will learn the proper lessons from all this and actually disband the simultaneously ridiculously-easy-to-abuse, almost-impossible-to-use-correctly fiat currency/central reserve/fractional reserve banking system. 'Cause governments NEED infinite money to function, yo. Without that unlimited power, how will they ever ascend unto godhood?

I say almost impossible to use correctly, but the truth is that it IS absolutely impossible to use correctly, because money's true value can only be judged when it's actively changing hands. This makes a debt-backed currency system akin to a house built with boards that are constantly altering their length. Eventually the structure collapses.

Sigh. But then, I'm financially pessimistic and theologically optimistic. Maybe someone else has a different take.





DrEast added to this post, 337 minutes and 18 seconds later...

"Stocks swayed on both sides of unchanged throughout the session. But they spiked in the final hour on a news report that Treasury Secretary Henry Paulson is looking to create a more long-term solution to the current credit crisis, perhaps creating an independent agency to take bad loans off bank balance sheets.

The market was "definitely rallying on the Paulson rumors," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. He said that the hope would be that if the government takes the bad assets off the banks' balance sheets, they'll start lending again.

The Treasury Department denied that Paulson had made any comments and said it does not comment on rumors." - from CNN

Good Lord, let's hope this one is just a rumor.

Krazy P
09-18-2008, 08:11 PM
Read carefully, Dr East. It was Schumer who was making the public comments. The same Schumer that started the run on Indymac. I am betting that he got caught napping in the latest downturn and was looking to recoup losses by making these pronouncements.

No rep from the Fed or Treasury had any comment. All the rumors about the "RTC solution" were from Schumer.

If you want a real laugh, read what Obama has to say about the situation. It is either extremely funny or extremely scary. I am not sure which.





Krazy P added to this post, 7 minutes and 0 seconds later...

Read carefully, Dr East. It was Schumer who was making the public comments. The same Schumer that started the run on Indymac. I am betting that he got caught napping in the latest downturn and was looking to recoup losses by making these pronouncements.

No rep from the Fed or Treasury had any comment. All the rumors about the "RTC solution" were from Schumer.

If you want a real laugh, read what Obama has to say about the situation. It is either extremely funny or extremely scary. I am not sure which.

Oops, I take this back! All the folks who caused the problem - Barney Frank, Chris Dodd - they are all on board with a plan for the taxpayer to foot the bill!

My God, do they have any idea of the cost?

Get ready, the tax bite is going be ... WOW!

I can't even begin to guess.

Krazy P
09-24-2008, 09:01 PM
Dr east - you and I are the only ones who seem to understand how serious the situation is!

Tomorrow is a big day - and few realize it.

History is being made - I wonder how it will go tomorrow.

I was able to get .03% for treasuries today - acch!

Currency swaps and libor - acch!

It could be very very nasty ... let's hope the system works!

CaptainA
09-24-2008, 09:41 PM
Dr east - you and I are the only ones who seem to understand how serious the situation is!

Tomorrow is a big day - and few realize it.

History is being made - I wonder how it will go tomorrow.

I was able to get .03% for treasuries today - acch!

Currency swaps and libor - acch!

It could be very very nasty ... let's hope the system works!

Not quite true Krazy, but I am not knowledgeable enough to add much, if anything to the thread. I may comment though that by some chance my personal portfolio is sick, but not dying as I expected. I have very little in real estate and the majority of my stocks are dividend paying stocks.

DrEast
09-25-2008, 06:37 AM
Well, I'm just a layman with an interest in history, but at this point, it goes one of two ways.

Bernanke and Paulson get a 700B bill (exact form doesn't matter): Banks benefiting for about two months before everything goes boom. They're still trying to deleverage in the trillions (nationally, internationally into the quadrillions), so 700B auctions just won't cut it. If the Fed tries to monetize debt when it does (my prediction: yes. This is HELICOPTER BEN), hyperinflation. At that point, stocks, bonds, and T-bills are not really your friends, you might say. Get your hands on some hard currencies and commodities (gold, silver, guns, ammo, food, bunkers...). Expect war on the home front... our leaders have forgotten that people rebel when things get bad enough. Or maybe they haven't, they've started shifting the military home for deployment in "the Homeland," to aid local authorities in case of "civil unrest." Echoes of Weimar Republic, except everybody has nukes now.

If Fed doesn't monetize debt (I wish, but it IS a possibility), Depression, as in "Second Great". In that case, having cash isn't so bad, but stocks and bonds are a wash. Don't stand under any stock broker's windows.

Banks don't get the 700B: Well, same as above, minus a 700B taxpayer bill and minus about two months (at MOST, could be as small as half a week) of "stability" before helicopter Ben, who famously declared in a debate, when asked how financial firms would get hold of the money when runs started, declared that they could drop it from helicopters because of this amazing new invention called the "printing press," decides whether hyperinflation to save the markets is a good thing*.

My call: We're all gonna be millionaires!

*Yes