tag:blogger.com,1999:blog-30643134.post8951837992176698807..comments2023-12-26T01:10:26.319-05:00Comments on Accrued Interest: Bringing balance to the ForceAccrued Interesthttp://www.blogger.com/profile/05096191765979971184noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-30643134.post-44552081157101687542007-11-26T15:47:00.000-05:002007-11-26T15:47:00.000-05:00Last month I was at RiskUSA where the Fed's Mishki...Last month I was at RiskUSA where the Fed's Mishkin gave the keynote. The press' report of his speech was very different from what I heard.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-91631655483559725312007-11-19T20:49:00.000-05:002007-11-19T20:49:00.000-05:00I think too many people are too worried about the ...I think too many people are too worried about the dollar, which I have written about several times. The evidence that a weak dollar causes inflation is poor.<BR/><BR/>Banks don't need risk-free assets, just performing assets. And they have plenty of performing assets. I think we're getting closer and closer to reality at <I>most</I> banks/brokers about their subprime securities losses. Citi may turn out to be a notable exception.<BR/><BR/>I think the inflation cost of getting through this will be modest as far as the Fed is concerned. But problematic for investors in long-term Treasuries, which I believe will rise in rate from here.<BR/><BR/>The comment on '03 is exactly on point.<BR/><BR/>And finally, remember, bear should be a market view, not a state of mind.Accrued Interesthttps://www.blogger.com/profile/05096191765979971184noreply@blogger.comtag:blogger.com,1999:blog-30643134.post-16273738062232044202007-11-19T14:53:00.000-05:002007-11-19T14:53:00.000-05:00And we know from '03 that they pay attention to ta...And we know from '03 that they pay attention to tails.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-59307990617996978892007-11-19T13:59:00.000-05:002007-11-19T13:59:00.000-05:00AI: Bernanke said he was adding food and oil to t...AI: Bernanke said he was adding food and oil to the inflation measure. What will be the source for his data manipulations to justify a cut once he includes consumable and oil inflation?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-65839515321591323632007-11-19T09:04:00.000-05:002007-11-19T09:04:00.000-05:00What if this causes a crisis of confidence in our ...What if this causes a crisis of confidence in our banking system?<BR/><BR/>What if......We're there....Banks need a bailout... and maybe Fannie too.... Any thoughts on FNM's credit loss ratio? YIKES!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-13120587772199146012007-11-18T20:56:00.000-05:002007-11-18T20:56:00.000-05:00They're steepening the yield curve to bail out the...They're steepening the yield curve to bail out the banks at the expense of everyone else. Low rates at the short end will put the dollar into freefall and spread global inflation contagion; high rates at the long end offer no relief for mortgages. In the end, you'll get the worst of all worlds: stagflation, foreclosures a-gogo, and Citigroup will need rescuing anyway, only this time the white knight from overseas will be Chinese instead of Arab.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-32006748504415439322007-11-18T19:33:00.000-05:002007-11-18T19:33:00.000-05:00You'll have to explain to me how there is carry in...You'll have to explain to me how there is carry in the traditional sense ...<BR/> When Mr. G bailed out the banks it was a simple exercise...under his edict Two year notes became a risk free trade in infinite size as long as he guaranteed the terminal rate on FED FUNDs...<BR/><BR/>What assets is "risk free" now to carry?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-88146271412591483242007-11-18T16:59:00.000-05:002007-11-18T16:59:00.000-05:00I don't doubt that the Fed can save the banks by d...I don't doubt that the Fed can save the banks by driving interest rates down as low as they need to go -- but as Japan illustrates, that's no way to save the economy.<BR/><BR/>The job of a lender of last resort is <B>not</B> to bail out the banking system when it gets into trouble, but to throw just enough money at the banking system when some banks collapse to keep the collapse from taking down fundamentally sound banks. A properly run lender of last resort makes sure that any bank that is so badly managed that it is triggering systemic concerns is turned over to new management within a short time frame.<BR/><BR/>In short, if Fed feels obliged to cut rates to support the banking system and we don't see some bank failures, the Fed is definitely not doing its job.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-79735978793184398722007-11-17T16:32:00.000-05:002007-11-17T16:32:00.000-05:00Well, don't you have to bring the dollar into this...Well, don't you have to bring the dollar into this?<BR/><BR/>Fine. Lower rates. The constituency for lower rates includes the Federal government and the consumer. Pretty large constituency.<BR/><BR/>But a dollar that continues to tank presents some difficulties.<BR/><BR/>I think the biggest is that significant portions of equity get bought by the Chinese. Maybe that bank that is going to fail.<BR/><BR/>Somehow, I think the Chinese are going to insist on some value for their dollar.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-54469196630377911682007-11-17T07:27:00.000-05:002007-11-17T07:27:00.000-05:00Seems cogent to posit that the only way out of thi...Seems cogent to posit that the only way out of this mess is to cut rates to keep the spending on a roll.<BR/><BR/>I'm confused by the seemingly circular reasoning that banks don't know what they are worth due to the "mark to mystery" dilemma,yet we can "know" that lower rates will save them by "carry". Wasn't a form of "carry" the egg that gave birth to the chicken, or vice versa. Or will the bankers be smarter this time.Anonymousnoreply@blogger.com