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There were no posts on M2M after 7:23 PM last night. That has to be a record, and some kind of signal even if it is the last 2 weeks of August when traffic is traditionally near its lowest point. Chrissmus-NooYeers is the other.

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not sure i agree 100% but some good thoughts

 

Understanding the Fear in the Markets

 

http://www.economicpolicyjournal.com/2010/08/understanding-fear-in-markets.html

 

Bottom line: You have a bunch of spooked investors now piling into fixed income investments, where their income from interest payments is negligible. At the same time you have at the other end, a mad scientist as head of the Federal Reserve. His mad concoction has resulted in his holding over a trillion dollars in mortgage backed securities. His introduction of interest payments by the Fed on reserves has resulted in banks placing over a trillion dollars with the Fed as excess reserves. This money could come flowing out and enter the system at anytime. Bernanke knows this. He also knows that no one will buy the junk MBS instruments he has on his books and that he will have to sell off huge amounts Treasury securities quickly, to prevent those excess reserves to suddenly flood the markets with huge new money that will be highly inflationary. He knows that execution of a Fed sale of huge amount of Treasury securities will be very difficult. He has enlisted money market mutual funds with assets of just under a trillion dollars to help him drain off the more than trillion dollars in securities the Fed may have to sell off quickly. Got that? The Fed may have to sell off a trillion in Treasury securities and he is, in part, counting on a group of money market mutual funds that cumulatively couldn't even raise a trillion dollars if they sold for cash every other asset they owned. The Fed does have other (shaky) options to sell off their Treasury securities by using their normal buyers, the Primary Dealers, but the Fed knows that there is nowhere near enough money in the primarily dealer network to absorb heavy Treasury selling. That's why Bernanke concocted his most recent tool of money market fund buyers, even though it appears they will be extremely limited as to how much Treasury securities they would be able to absorb. (I estimate that they could buy no more than $50 billion without causing gigantic price swings in other markets, if they tried to liquidate other assets to but Fed offerings of Treasury securities.)

 

Thus, we have a very spooked crowd holding fixed income assets. At the same time, we have a money supply growth situation that could explode at any time, with a Fed that may or may not be able to bring such a money explosion under any type of control at all.

 

I have never seen such a combination of elements that could result in such a huge shift from current trends. A shift that could result in a huge inflation and a flight out of fixed income investments that would result in a huge collapse in bond prices and accompanying skyrocketing in rates. Exact timing on when all this could play out is always difficult to impossible to determine, but just know all the elements are there.

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There were no posts on M2M after 7:23 PM last night. That has to be a record, and some kind of signal even if it is the last 2 weeks of August when traffic is traditionally near its lowest point. Chrissmus-NooYeers is the other.

 

It's wearing on me waiting for something to happen. Every Sunday night i keep thinking this will be the one when reality sets in, but no....

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"Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg. The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.

 

More than likely, that era is gone for good."

 

Real estate fading as a means to build wealth.

 

I have been saying this for five years now and have been told I was an idiot more than once.

 

On the other hand, this could be the signal that housing has bottomed. Kind of like the $12/gallon gas.

 

 

Better read Doc's WSE Real Estate letter before you consider buying any RE. B)

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"Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg. The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.

 

More than likely, that era is gone for good."

 

Real estate fading as a means to build wealth.

 

 

So combined with disillusion with stocks the younger generations are being told, if they know it or not quite yet know it but it may be seeping in, that they are going to have to work and save to gain wealth. Too bad there are no jobs and savings provide minuscule appreciation.

 

There is no way there are not going to be continued efforts to inflate asset prices, RE or otherwise. Americans will simply never accept it. Real estate inflation or appreciation is built into Americans DNA. George Washington was an RE speculator. The system cannot hold without it.

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There were no posts on M2M after 7:23 PM last night. That has to be a record, and some kind of signal even if it is the last 2 weeks of August when traffic is traditionally near its lowest point. Chrissmus-NooYeers is the other.

 

 

mebbe everyone was going gaga over the budget wall chart. It is kinda impressive. i looked all over it and the question I have is .....

Where's mine? :P :P :P

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not sure i agree 100% but some good thoughts

 

Understanding the Fear in the Markets

 

http://www.economicp...in-markets.html

 

Bottom line: You have a bunch of spooked investors now piling into fixed income investments, where their income from interest payments is negligible. At the same time you have at the other end, a mad scientist as head of the Federal Reserve. His mad concoction has resulted in his holding over a trillion dollars in mortgage backed securities. His introduction of interest payments by the Fed on reserves has resulted in banks placing over a trillion dollars with the Fed as excess reserves. This money could come flowing out and enter the system at anytime. Bernanke knows this. He also knows that no one will buy the junk MBS instruments he has on his books and that he will have to sell off huge amounts Treasury securities quickly, to prevent those excess reserves to suddenly flood the markets with huge new money that will be highly inflationary. He knows that execution of a Fed sale of huge amount of Treasury securities will be very difficult. He has enlisted money market mutual funds with assets of just under a trillion dollars to help him drain off the more than trillion dollars in securities the Fed may have to sell off quickly. Got that? The Fed may have to sell off a trillion in Treasury securities and he is, in part, counting on a group of money market mutual funds that cumulatively couldn't even raise a trillion dollars if they sold for cash every other asset they owned. The Fed does have other (shaky) options to sell off their Treasury securities by using their normal buyers, the Primary Dealers, but the Fed knows that there is nowhere near enough money in the primarily dealer network to absorb heavy Treasury selling. That's why Bernanke concocted his most recent tool of money market fund buyers, even though it appears they will be extremely limited as to how much Treasury securities they would be able to absorb. (I estimate that they could buy no more than $50 billion without causing gigantic price swings in other markets, if they tried to liquidate other assets to but Fed offerings of Treasury securities.)

 

Thus, we have a very spooked crowd holding fixed income assets. At the same time, we have a money supply growth situation that could explode at any time, with a Fed that may or may not be able to bring such a money explosion under any type of control at all.

 

I have never seen such a combination of elements that could result in such a huge shift from current trends. A shift that could result in a huge inflation and a flight out of fixed income investments that would result in a huge collapse in bond prices and accompanying skyrocketing in rates. Exact timing on when all this could play out is always difficult to impossible to determine, but just know all the elements are there.

 

 

Take a few facts and mix with a pile of gibberish and this is what you get.

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