Are we hitting a deflationary patch?

[icm63]

Re: Are we hitting a deflationary patch?

Why do markets go up when news is not so good, why do markets go down when news is not that bad, I sorry this market is 70% computer trading...ever wonder what those huge spikes are between 9.30 and 9.40 are from...

Just listen to Max Kieser..
ref: http://maxkeiser.com/
Post : The Truth About Markets

High Frequency trading could be set to SELL or NOT BUY..

Thus selling could continue for days...

A came of chicken between BANKS(GS) vs VOLKER and Obama new position. As Banks donk like the new Obama talk..

High Frequency trading is claimed to be 70% of market activity..ever wonder why LUNCH time volume is so low, cause GS boys are out to lunch !

THE High frequency brokers have just been paid there bonus, they dont care if 2010 is a down year they can retire !

[0tr]

Re: Are we hitting a deflationary patch?

Expecting a market maker exemption. The Volker thing is window dressing. GS et al will claim that their proprietary trading is simply for markets efficiency, for market making or some such ruse.

Any way, no regulation will pass the senate.

[raja]

Re: Are we hitting a deflationary patch?

but according to Fox News Obama's reckless speach on financial reform took down the stop markets 200 points and will hurt American business, prolong the recession, bad for American's 401ks, ..
...then they jumped back on the 20 year old "de-regulation" spin in that financial regulation is reckless socialism and we need to keep government out of our lives ..
just like heatlh care and all other government regulation the hurts big business but helps Americans.

most amazing to me is how working class republicans are so retarded as to constatly vote against thier own family's well being. That has got to be the true definiion of being retarded.

Well, you have to consider that the "average" person's IQ is only 100. That means that half the people are below 100 :eek:

Challenged though they may be, most people are educable. And the more pain they feel, the more they will listen. It's up to those of us who are more informed to do the educating . . . or we can leave it to Fox News, and you know how that will turn out.

I'm taking every chance I get to talk at least briefly with people with whom I come in contact . . . store clerks, delivery men, etc. It's only by grass roots action that we can defeat the Rich and Powerful, who would condemn us all to Debt Slavery if they had their way.

Some of my simple talking points:

1. This is not an issue of Republican vs. Democrat. The Financial Crash happened under President Bush, while seeds of the Crash were planted under President Clinton's administration, for example, deregulation allowing banks to gamble with depositors money.

2. The Financial Elite need to be controlled. They are now collecting billions in bonuses, while the American People are losing jobs, homes and retirement savings. This disaster happened under financial de-regulation and "free" markets.

3. If the greedy Financial Elite are not stopped by government regulation, they will suck all the life out of The American People. Thirty years ago, the top 5% of the population controlled 30% of America's wealth; now that 5% owns almost 60% of America's wealth.

4. Only WE can stop the Financial Elite from driving us into Debt Slavery. The Politicians won't do it unless WE force them. Support effective government regulation, such as the Volker Plan! Call your Congressman and tell them you want the Wall Street and Big Bank gamblers to stop stealing OUR money!

[cjppjc]

Re: Are we hitting a deflationary patch?

It feels like people are starting to cut back now that Christmas is over.

Yes I noticed this as well. The malls are deserted by me.

[thunderdownunder]

Re: Are we hitting a deflationary patch?

If it is substantial, it also means that the banks' balances look far worse than people are letting on.[/QUOTE]

If you extend that view, you come to the conclusion that All of the Banks that have compromised balance sheets know that the others they deal with on a daily basis have the same major problem. They can pretend only so long but eventually mistrust will resurface and the basic instincts for survival will strangle the symbiotic relationships. They are intelligent people and they know you cannot continue to take losses on board. Some of the banks have taken on so much water their pumps are now overwhelmed and they place in mortal danger the others tied up alongside. There comes a time when a decision must be made to cut the ties.
Could it be that the changes about to come signal an acceptance of the inevitable. An orderly abandonment of the old policy of saving the "crippled" is required to prevent a major catastrophe. The order has been agreed and will be issued even if it means a nationalization of the remainder. It is a good thing to go from denial to acceptance.
Let the healing begin.
It is certain that some "masters" are about to walk with a little prodding. Then you will know.
Perhaps a little light humour is required to explain it all.

http://www.youtube.com/watch?v=pBlIoCzzvbg

[blazespinnaker]

Re: Are we hitting a deflationary patch?

Seriously, I can imagine a scenario where, in the absence of consumer lending by the financial sector, this Administration, Congress and Senate use F&F as an important conduit to funnel stimulus money directly to "the people".

Of course .. I guess they're taking cues from Canada and the CMHC, eh?

Except that for the moment it seems to be working a bit better here. Probably because we have a lot less people and a much more solid commodity backed currency..

[GRG55]

Re: Are we hitting a deflationary patch?

f&f will get its money from the treasury...

So will every other recipient of government largesse. F&F aren't unique in that sense.

And other than whatever can be sold to domestic buyers as a result of the increasing savings rate, if foreign private and official sector buyers demur [seems likely] then, yes, the Fed will continue to fill in the hole...

[mmr]

Re: Are we hitting a deflationary patch?

At least for a while, they're going to force the larger US banks to buy mortgage and treasury securities in order to "strengthen their liquidity". Basically, depositors will be funding mortgages and the national debt with our deposits directly through the banks rather than indirectly through the Fed. (The effect on the mortgage market will be the same, but the MBS won't show up on the Fed balance sheet).

[Jay]

Re: Are we hitting a deflationary patch?

don't forget the fed is supposed to end qe in march. i imagine they might actually stop buying mbs for a while. that will spike mortgage rates, coinciding with the huge increase in resets for alt-a, option-pay mortgages. we should start a pool on how long the fed stays out of the mbs market.

I'm going to bet zero minutes, but it may take time to figure out what the new SIV ends up looking like.

Whoops you already laid it out:

"f&f will get its money from the treasury. the treasury will get its money by selling tbonds... to the fed."

Obvious, but won't this be too public?

[jk]

Re: Are we hitting a deflationary patch?

I'm going to bet zero minutes, but it may take time to figure out what the new SIV ends up looking like.

Whoops you already laid it out:

"f&f will get its money from the treasury. the treasury will get its money by selling tbonds... to the fed."

Obvious, but won't this be too public?

it will be less public than what they're doing currently.

[GRG55]

Re: Are we hitting a deflationary patch?

it will be less public than what they're doing currently.

It may also improve the monetary velocity of the new injections into the economy, compared to what has happened so far...

[Jay]

Re: Are we hitting a deflationary patch?

it will be less public than what they're doing currently.

jk, this is what my bud sent me this morning, don't know where he got it, or if it is his:

"How to spend $1.5 trillion without Congressional approval
Step 1: Federal Reserve purchases $1.5 trillion in Fannie Mae and Freddie Mac securities, creating $1.5 trillion of monetary base to pay for these purchases.
Step 2: U.S. Treasury quietly announces unlimited support for Fannie Mae and Freddie Mac on December 24, 2009, exploiting a loophole in a 2008 law that was originally written to insure a maximum of $300 billion in total mortgage principal (not losses, but principal).
Step 3: Over the next several quarters, the U.S. Treasury issues $1.5 trillion in new Treasury debt to the public, taking in the $1.5 trillion in base money created by the Fed in Step 1.
Step 4: U.S. Treasury hands that $1.5 trillion in proceeds from the new debt issuance to Fannie Mae and Freddie Mac.
Step 5: Fannie Mae and Freddie Mac use the proceeds to redeem the $1.5 trillion in mortgage securities held by the Fed, thus reversing the Fed's transactions in Step 1, without the need for any other "unwinding" transactions (watch). The base money created by the Fed comes back to the Fed, and the mortgage securities purchased by the Fed disappear, by burdening the American public with a new, equivalent obligation in the form of U.S. government debt.
Outcome: The Federal Reserve closes its positions in Fannie Mae and Freddie Mac securities, the quantity of outstanding Fannie Mae and Freddie Mac liabilities declines by $1.5 trillion, thus allowing their remaining assets repay the remaining liabilities without a $1.5 trillion hole of insolvency, and the outstanding quantity of U.S. Treasury debt expands by $1.5 trillion in order to protect the lenders, while ordinary Americans continue to lose their homes and jobs.
Throughout this crisis, the ultimate objective of Bernanke and Geithner has consistently been to protect the bondholders. This objective will not change unless the leadership changes."

This is basically how they have been doing it up until the present I believe. You are postulating that the Fed now buys tbonds directly instead of putting the f&f debt on their balance sheet. So then, the f&f toxic soup ends up on the Treasury's balance sheet in your version.

[jk]

Re: Are we hitting a deflationary patch?

jk, this is what my bud sent me this morning, don't know where he got it, or if it is his:

"How to spend $1.5 trillion without Congressional approval
Step 1: Federal Reserve purchases $1.5 trillion in Fannie Mae and Freddie Mac securities, creating $1.5 trillion of monetary base to pay for these purchases.
Step 2: U.S. Treasury quietly announces unlimited support for Fannie Mae and Freddie Mac on December 24, 2009, exploiting a loophole in a 2008 law that was originally written to insure a maximum of $300 billion in total mortgage principal (not losses, but principal).
Step 3: Over the next several quarters, the U.S. Treasury issues $1.5 trillion in new Treasury debt to the public, taking in the $1.5 trillion in base money created by the Fed in Step 1.
Step 4: U.S. Treasury hands that $1.5 trillion in proceeds from the new debt issuance to Fannie Mae and Freddie Mac.
Step 5: Fannie Mae and Freddie Mac use the proceeds to redeem the $1.5 trillion in mortgage securities held by the Fed, thus reversing the Fed's transactions in Step 1, without the need for any other "unwinding" transactions (watch). The base money created by the Fed comes back to the Fed, and the mortgage securities purchased by the Fed disappear, by burdening the American public with a new, equivalent obligation in the form of U.S. government debt.
Outcome: The Federal Reserve closes its positions in Fannie Mae and Freddie Mac securities, the quantity of outstanding Fannie Mae and Freddie Mac liabilities declines by $1.5 trillion, thus allowing their remaining assets repay the remaining liabilities without a $1.5 trillion hole of insolvency, and the outstanding quantity of U.S. Treasury debt expands by $1.5 trillion in order to protect the lenders, while ordinary Americans continue to lose their homes and jobs.
Throughout this crisis, the ultimate objective of Bernanke and Geithner has consistently been to protect the bondholders. This objective will not change unless the leadership changes."

This is basically how they have been doing it up until the present I believe. You are postulating that the Fed now buys tbonds directly instead of putting the f&f debt on their balance sheet. So then, the f&f toxic soup ends up on the Treasury's balance sheet in your version.

the hand is quicker than the eye, and it's hard to see which shell is hiding the pea. or did it fall off the table?

[Jay]

Re: Are we hitting a deflationary patch?

the hand is quicker than the eye, and it's hard to see which shell is hiding the pea. or did it fall off the table?

There was no pea to begin with!

[Rajiv]

Re: Are we hitting a deflationary patch?

I believe that this was written by Dr. John Hussman