September 16, 2008

Deflation comes in many forms




Get ready for the panicked rate cuts next.

We're going to 0%.

Just like Bernanke told us he would.

15 comments:

Anonymous said...

ZIRP?

nahhhhh...

NIRP.

Anonymous said...

New to your blog. LMFAO! Keep it up.

Anonymous said...

Of course the Feds are going to cut rates . Of course the government is going to try to re=spike housing prices ,or at least try to stop
the bleeding in the real estate market .

Of course the only people that will be allowed the really cheap easy money loans will be the people in default ,or the liar loan speculators .

Anonymous said...

Hedge Funds and Speculators like volatile environments because they can make allot of money from the swing.

However, like a poker game when the chips run out and no one is willing to give you any more credit then it is time to show or fold your cards.

So just like a poker game when the stake are high you will need to measure your risk, and sometimes like a bluff this risk can be hedged but you will need more chips or credit to do so.

The best way to measure global financial confidence or risk is through the use of the TED spread.

The TED spread can be considered a measure of banks' willingness to lend to each other.

The traditional definition of TED spread is the difference between the interest rate on a three-month US Treasury bill and the three-month LIBOR rate (London Interbank Offered Rate).

Widening of the two spreads is an indication that banks don't want to lend to each other because there is a flight to safety.

So if a Hedge Fund or a Speculator can not get any more credit or chips from the banks to continue playing their hand then how can they hedged their current position.

Wouldn't be safe to say that a Hedge Fund or Speculator will have to unwind some of their positions to pay for other losing positions which in turn could cause more lost in other sectors of the economy.

What will happen when many hedge funds and speculators all decide to start unwinding their position at the same time.

Can a major unwinding event cause a shock to the financial derivative market causing the derivative market to unwind.

That is something the Fed Reserve will need to decide.

The TED spread is currently at 180 basis points.

http://www.bloomberg.com/
apps/quote?ticker=.TEDSP:IND

k.w. - Southern Ca. said...

As long as you are "safe", you can laugh your a** off, but it's no laughing matter.

It's going to get very ugly, for alot of people across all economic brackets.


Anonymous said...
New to your blog. LMFAO! Keep it up.

Ash said...

If this is the death of Wall Street as we know it, the tombstone will read: killed by complexity.

keith said...

Anyone got their rally cap on?

Big day today. I expect Bernanke to come out with guns blazin...

We'll see. If we don't rebound, trouble.

http://tinyurl.com/5ol2q3

Investors could be forgiven for having some indigestion after today’s 504 point drop in the Dow Jones Industrial Average, the sixth worst on record. But there is reason for a dose of optimism, according to Richard Peterson, director of markets, credit and risk strategies at Standard & Poor’s.

Peterson notes that in four of the five biggest point drops, the Dow came back with a vengeance the following day, scoring triple-digit gains that went as high as 337 points on October 27, 1997. The only down day-after of the five disastrous down days was seven years ago, after the market reopened following its weeklong closing after the September 11, 2001, attacks. To be sure, Tuesday is chock-full of potential newsmaking events: Goldman Sachs (GS) is due to report earnings, the Fed is meeting (and some say could cut the Fed funds rate by as much as 50 basis points) U.S. Treasury Secretary Henry Paulson is testifying before Congress about the nationalization of Fannie Mae (FNM) and Freddie MAC (FRE), and last, but surely not least, the Asian markets, closed for a host of different holidays Monday, will get their first chance to react to all the turmoil in the U.S. financial sector, and the resulting market rout.

Oh, there actually is one other reason for hope this Tuesday, Peterson notes: the Standard & Poor’s 500 index, which Monday suffered a 59 point loss, its fifth worst, has always rallied smartly the day after the four previous routs.

– Robin Blumenthal, Senior Editor, Barron’s Magazine

redondo_beach_dude said...

Not today.

Anonymous said...

Bail me OUT first !
my home bills due
my auto bill
my insurance
my medical bill
my dental bill
my visa bill

just sent in the keys to bank
freedom at last ..
throwing in the towel

John said...

They can't lower rates. Read this and learn why...

http://www.itulip.com/forums/showthread.php?p=48133#post48133


Ever heard of the phrase "between a rock and a hard place"?

Anonymous said...

The Federal Reserve Bank of New York provided $87 billion to Lehman Brothers

http://www.reuters.com/article/
bondsNews/idUSN1648070820080916

Anonymous said...

Mish, NOT PETER, was right. It's deflation, deflation. Keep waiting for gold to spike.

I am holding on to treasuries for now suckers.

Dny

seattleMoose said...

I read that BB link from 2002. All I can say is....YEP, I NOW KNOW WITH 100% CERTAINTY THAT DEFLATION IS COMING. Why? Because the articles whole argument is based on lies (e.g. sound economy) and the bogey man of inflation (which they actually see as a good thing and "business as usual").

Rates are already at 2%......lowering them will make little if any difference. BB is pushing on a string.

The bankers will do anything to keep the "usery" scheme going....problem is that it has run its course.

The expansion of the inflation driven financial universe is over. Now it will start falling back on itself...accelerating all the way to the end.

Most of us don't have THAT much to lose. But those at the top, have EVERYTHING to lose by comparison (yachts, mansions, islands, etc.). Hence, the panic from those at the top of the pyramid of crumbling rotten wood, have the farthest to fall. This is also the reason the FED (that unaccountable, unelected, privately owned pirate ship) keeps bailing out their oinker friends with OUR MONEY. Nice to see our US tax dollars being appropriated by an unelected/unaccountable body over which we the people of the U.S., have ZERO say. Think about that and be mad...very mad.

Honestly, if I knew that a complete collapse would put everyone on the same footing and would abolish "the FED", I would risk losing everything to bring down the whole stinking pile of crap. I know that I have skills and am hard working and could live with much less and be fine. They on the other hand......are useless, fat, parasitical, white maggots.

BTW....I saw maggot Paulson this morning saying AIG would not be bailed out with taxpayer money and guess what....I just read that AIG is being bailed by the FED with taxpayer money.

FAT WHITE USELESS PARASITICAL MAGGOTS!!!

the Economist said...

There won't be deflation.

There will be biflation.

http://en.wikipedia.org/wiki/Biflation

For things that you pay for with cash, like groceries, gas, etc, you'll see rising prices. And you know your taxes WILL go up.

For things you pay for with credit like cars, and houses, those will drop like a rock because the credit will not be there.

lee said...

So what is gold saying about deflation now?

Is gold a sell here?