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From A Different Perspective


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Unemployment claims at 439,000 ... if you're GWB, you've got to be slamming your fist against the meal tray on Air Force I.

 

If there's not enough liquidity, then they'll provide EVEN MORE.

 

No ill wishes to Kali -- I hope it squeaks through without a default. But if it DOES go down, I would BUY THAT WITH BOTH HANDS on the big, black scary headlines. Probably the greatest contrarian buy signal of all time, that would be.

Machine - just so I am positive I understand your logic...in the event Cali defaults, you would expect the Lounge Lizard to supply effusive liquidity to the markets to smooth over potential dislocations? If so, how would this help Cali's creditors whose paper is at that point worthless?

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mjkst27

 

Yes. He can't directly bail out Kali's creditors. But he can make sure they have plenty of temporary credit until the cash flow comes back. (Even the rating agency which uttered the D-word said 100% recovery would be expected ... eventually.)

 

Previous precedents are NYC (1975) and Orange County (1994). Governments look after their own.

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Machine: My point exactly! ALl the pumping just makes the economy worse. If they allowed liquidation, we could proceed with a recovery, but all of greenspews monetary bullets will not put humpty dumpty back together again. How in the world can you cure the patient with the same medicine that nearly killed him?

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mjkst27

 

Yes. He can't directly bail out Kali's creditors. But he can make sure they have plenty of temporary credit until the cash flow comes back. (Even the rating agency which uttered the D-word said 100% recovery would be expected ... eventually.)

 

Previous precedents are NYC (1975) and Orange County (1994). Governments look after their own.

Thanks!

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Machine:   My point exactly!   ALl the pumping just makes the economy worse. If they allowed liquidation, we could proceed with a recovery,   but all of greenspews monetary bullets will not put humpty dumpty back together again.   How in the world can you cure the patient with the same medicine that nearly killed him?

You can't, soup. In my heart I know you're right. Sometime in the next decade the whole system will hit the wall and crack up.

 

Meanwhile they're going to juice a couple of more phony 'recoveries' out of it, paid for with the debt that will sink the system 10 or 15 years from now.

 

Being a pragmatist, I'm just trying to hitch a ride in the mafia's big black car, instead of standing on the street corner throwing rocks at them. They've got the guns. But I've also got my hand on the door handle, to jump out at the next traffic light and run.

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You can't, soup. In my heart I know you're right. Sometime in the next decade the whole system will hit the wall and crack up.

 

Meanwhile they're going to juice a couple of more phony 'recoveries' out of it, paid for with the debt that will sink the system 10 or 15 years from now.

 

Being a pragmatist, I'm just trying to hitch a ride in the mafia's big black car, instead of standing on the street corner throwing rocks at them. They've got the guns. But I've also got my hand on the door handle, to jump out at the next traffic light and run.

Oh Machine, you're so. . . manly!

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