Fraud is fraud, monetary policy is NOT

Hein-Verbruggen

Seems to be tremendous confusion out there re: Whom to blame, how to fix the next global recession.

Foolish Margin Lending policies (retail) and Hedge Fund lending (wholesale) blew up the equity market bubble in 2000/2001 after speculation was levered 5:1 or more.

The feds lowered rates and Walls Street shifted sales back over to the 'fixed income marketplace'. Wall Street 'fixed' that economic motor by going variable and inventing new products for old ideas (use a consumer credit card to purchase homes and/or trust people to convert their existing home into cash via a refi)

They got regulators to go on a long vacation (ignore all underwriting rules) and added more steroids with slick sales scripts.

The feds eventually raised interest rates in an effort to head off inflation. (debasing of the US Dollar amist of foreign markets)

ARMs (adjustable rate mortgages) have to reset based on current indexs---all of which were rising. In addition, and wholly independent of interest rates, liars who borrowed more principal than they could afford began defaulting.

These junk products had been stuffed into deceptively designed synthetic products (CDOs, CLOs, etc..) and were not found on most bank balance sheets, hence no loan loss requirements for the banks.

The underlying (lying) root cause of the loss of our credit markets was due to 'structured finance', aka: stealing free money, then hiding the crime by risk dumping into pensions, hedge funds or into secret private equity.

The Black Box syndrome. Much like the China Syndrome.

In any case---the world central banks will commence LOWERING interest rates over the next year in order to restore some life into a dead credit markplace. The market will return---on a smaller scale with fewer banks/brokers, hedge funds and less competition too. Less fraud.

Deflation of real estate values (trillions) will be an overriding theme, not rising prices for gasoline (blood for oil policies).

Inflation will follow eventually as this trauma medicine is just another cycle of yo-yo monetary policy which follows Wall Street around in the same way drug dealers follow elite athletes.

Monetary policies, fiscal policies, IMF policies, and capital (private & public)markets all work together in a most perverted way.

Let's enjoy the ride--and tap our reserves.

limerickman

Confusion reigns on your part, hein.

And by the way, global recession is another misdiagnosis on your part.
There is no threat of a global recession.

There is a threat of a US recession however.





You've misdiagnosed the reason why the equity bubble materialised in 2000/2001.

Equity markets bubble materialised, in part, because of deregulation of the investment market.
The main advocate of which was Alan Greenspam.
In addition, investment institution invested cleints funds in the equities of companies based upon "future profits" : when those profits (of the new economy companies) failed to materialise, those shares were worthless.





You said earlier that the central banks were going to lower interest rates.
Now you're saying that the will commence lowering interest rates over 12 months.
Your assumptions are flawed.

First : the fallout of the sub-prime market debacle is US-centric.
The threat of recession is more immediate in America than it is in other regions.

European interest rates have been on an upward trend and will continue to move upward or remain static until the end of 2007.
I suggest that you read the ECB's statements following their monthly monetary policy meetings.
British interest rates have also been on an upward trend.

Bernie has chosen to slash US rates because he isn't sure about the threat of a US recession.
He has no choice.
He's paying the price of Greenspan's mistakes.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

Hein-Verbruggen

School--back in seesion for those who must repeat summer sessions.

As the US economy goes---so Europe will follow.

The big C is what drives the modern world now. And hedge funds.

Consumption
Credit

Both are in free fall and in need of trauma medicine (steroids, EPO, and blood transfusions and central bank intervention with lower interest rates)

Financial fraud aided by lack of regulations (states reg real estate), (SEC reg Wall Street) which is the same as Dick Pound reg Lance's blood & liver functions.

It is more fun to blame monetary policy for the crimes of individuals. Just as cycling fans blame doping on the French LNDD.

Same analogy. Denial is the key.

Look for lower interest rates to soften up the European recession.

Hein-Verbruggen

The global recession is now upon us. Don't expect your advertising-based media to report on it until blood flows into the gutter.

In the USA today:

1) The DOW Jones down another 1.22% on its steady descent into the abyss.
2) Consumer Confidence declined again
3) Home prices declined at the steepest monthly rate (3.3%) since index records were created in 1987.

Look for Big Box Store Sales and Auto purchases to crater next.

Layoff visas are imminent.

Hypnospin

there was a chap here in the states, milken was his name, did some time for dabbling in what was termed at the time junk bonds, lotsa folks lost big.

this was round the time of the banking s &l scandals that resulted in yet more loss.

now the rating of these junk bonds, er, derivitives (oops, gotta call 'em hedge funds now, so much less suspect a term i suppose)
have made the milken style brokering mainstream and endorsed by the fed rated AAA, so as now municipalities, school districts, pension funds and private investors through their mutual funds can join in the fun.

like voting republican (let us not forget who got trickled upon during those times of the reaganesque "trickle down" policies which bush continues today with tax cuts, deficit spending, and redistribution of wealth from the majority of working people to the small percentage of the wealthiest billionaire elite, his true constituents), stupid practices that are based on exploitation rear their head under new guise every generation or so...those who forget history are condemned or something like that.

__________________
"The dogmas of the quiet past are inadequate to the stormy present...As our case is new, so must we think anew and act anew"
Abraham Lincoln, in his address to congress dec. 1st, 1861

limerickman

Hein : the Dow is down.
US consumer confidence is down too.
And US home prices are at 17 year low.

All are issues.

None of this is good news : part of the knock on effect of all of this is that
the man on the street is affected.

So instead of telling us, what we already know (we know that the Dow is down etc............) and gloating about it, spare a thought, for example, for the pension funds of people (people who may well be members of this Forum) who's value hangs by a thread.


And also remember, Hein, that it was your goverment who not three years ago wanted to privatise part of your country's social welfare system by investing it in said markets and financial instruments.

Not a time for gloating, Hein.
Or posing for that matter.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.