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250 billion isn't that big of a deal for the economy assuming Denninger is even right. So far none of his apocalyptic predictions have come true.
On top of that one minute he agrue's the problem is everyone defaulting on credit cards, the next he agrue's the problem is all the interest people will be paying. So which is it?
This guy used to have some credibility but he's becoming the bearish version of Jim Cramer concocting a new story everyday to further his thesis. Maybe he should write less often instead of trying to fabricate content dailyfor his blog.
Denninger does still uncover some good stuff. He reported about the Treasury repurchases by the Fed.
But I do agree with Traderx that he's leaning way more to the deep end then he used to.
Traderx..that analogy with Cramer is a good one and I think that is what happened with Denninger.
I still read his site every now and then but pretty much stopped the regular reading once he went off the deep end with the bailout last year.
250 billion isn't that big of a deal for the economy assuming Denninger is even right. So far none of his apocalyptic predictions have come true.
On top of that one minute he agrue's the problem is everyone defaulting on credit cards, the next he agrue's the problem is all the interest people will be paying. So which is it?
This guy used to have some credibility but he's becoming the bearish version of Jim Cramer concocting a new story everyday to further his thesis. Maybe he should write less often instead of trying to fabricate content dailyfor his blog.
i don't think that you can argue with his point that the excess spread comes off of our GDP, hampering GDP growth. i don't necessarily think he is calling for a "meltdown", but i agree with him that things cannot continue in this direction much longer without some serious ramifications for our economy.
Last edited by floridasandy; 08-22-2009 at 06:17 AM..
They would see that the Fed's sole responsibility is to keep the rich people, rich and the poor people, poor... They manipulate the market to preserve the wealthy's money... at the expense of everyone else...
Their peek-a-boo accounting will be put into service to play the toxic waste shell game. If a real audit took place people would see that the FED is like a vault filled with garbage, medical waste, and spent nuclear material with a box of nickels hidden in there. I agree with the above statement, they exist only to direct wealth to the non-productive. However, if the Fed could be eliminated a new scheme would arise to replace it. I am convinced that the only way for people to escape this silliness is to convert their wages to commodities immediately and only invest in enterprises they are a part of or have intimate knowledge of.
As the crisis worsened at the end of 2007, the Fed created new liquidity facilities, some of which involved new recipients, beyond depository institutions, such as investment banks and corporate commercial paper issuers. In addition, in 2008, the Fed made extraordinary “bail-out” loans to avoid the failure of systemically important institutions – a $30 billion (£18bn, €21bn) non-recourse loan, with a $1 billion deductible, to assist JP Morgan Chase’s acquisition of Bear Stearns and the creation of a two-year $85 billion credit facility for AIG. Also, the Fed, in partnership with the Treasury and Federal Deposit Insurance Corporation, guaranteed $424 billion of losses on pools of Citigroup and Bank of America bad assets.
These actions have had a big impact on the Fed’s balance sheet. As of June 2009, its total assets had risen to over $2,000 billion compared with $852 billion in 2006, and only 29 per cent of these assets were Treasury securities, compared with 91 per cent in 2006. Traditional loans by a lender of last resort are sufficiently collateralised to prevent moral hazard for borrowers and reduce risk to the central bank. However, the adequacy of the collateral of these new Fed positions is unclear.
These actions have not only increased the Fed’s risk, the shortage of Treasuries has hampered the Fed’s ability to conduct its central mission – monetary policy. In order to counter the potential inflationary impact of its credit expansion, the Fed requested that the Treasury sell special issues of Treasuries under the Supplementary Financing Program – not to raise revenue but simply as part of the conduct of monetary policy. As of June 3, 2009, the Supplementary Financing Account of the Treasury was about $200 billion compared with Treasury holdings of about $475 billion, indicating that the Treasury had become a significant player in monetary policy. (FT)
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