[papasmurf]

Why did my heart just drop???

Why would he make a speech like that, and broadcast that kind of information?

[Travis McGee]

Here’s Dudley on his list of things he never expected to see:

Briefly, let me give you a few examples of events that I never expected to see—ever:

AAA-rated mortgage-backed securities selling at 85 or 90 cents on the dollar,

asset-backed commercial paper backstopped by real assets and a full bank credit backstop yielding more than unsecured commercial paper issued by the same bank—in other words, the real assets as collateral viewed by market participants as a negative rather than a positive,

3-month LIBOR (the interbank deposit rate in London for dollars) as high as 100 basis points above the fed funds rate target—certainly possible if the monetary authorities were in the process of tightening monetary policy aggressively, but nearly inconceivable given the widely held expectation that the central bank would likely be cutting interest rates,

Treasury bill rates rising and falling 100 basis points in a single day,

and nearly a failed Treasury bill auction—total bids were barely sufficient to cover the amount the Treasury was offering. This near-miss occurred despite the fact that money market mutual fund investors were fleeing to rather than away from Treasury securities.

[Travis McGee]

econoping.

"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market and so check the movement."

---Harvard Economic Society, October 19, 1929

---

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

~~Ludwig von Mises

[Travis McGee]

Econoping.

[Travis McGee]

I can’t believe the lack of response to this.

[redgolum]

Ok, in plain English, what does that mean?

[capitalist229]

The Fed cannot fight the effects of loose money with more loose money.

Lowering rates can only result in negative TIC flow reports and a collapsing dollar.

BUMP