Nightmare Scenario Building??

[VanMorrisonFan]

Aside from home loans, there are significant problems with car loans, credit card loans, and student loans.

Essentially what happened is that over the last decade or so, as the Fed followed a policy of keeping interest rates low, lenders gave money to people who, in retrospect, weren’t the best credit risks. Housing was the most visible sector where this happened, but it happened in other sectors as well.

Now the solution that is being proposed (and followed by the current Fed) is…more cheap money. It’s as though the hangover is just starting, so we’ve got to get a few drinks under our belt in order to “take the edge off” so to speak.

I don’t know what the solution is, but I don’t think more cheap money is a good idea.

[kewp]

SD Realtor,

I’m very well aware of that. Which is why I’m not participating in my employers pension fund until this is over and taking care of my investments personally. Luckily I’m young enough (barely) and my expenses low enough to get away with this.

I’ll also comment that I don’t understand how people are getting the idea that the paper has no value. Some of us (like myself) pay our debts. Most people do. I suspect whats going to happen is they will take a big haircut (maybe 50%) before the vultures pick them up at a discount.

One solution might be for the Fed to start lending money directly to consumers with good credit (above 700 FICO) at the current interest rates. The problem we are going through now isn’t so much a problem of cheap money, but of bad borrowers. If we restrict credit to people that manage their money it will get the country back on track much faster.

[kewp]

SD Realtor,

I’m very well aware of that. Which is why I’m not participating in my employers pension fund until this is over and taking care of my investments personally. Luckily I’m young enough (barely) and my expenses low enough to get away with this.

I’ll also comment that I don’t understand how people are getting the idea that the paper has no value. Some of us (like myself) pay our debts. Most people do. I suspect whats going to happen is they will take a big haircut (maybe 50%) before the vultures pick them up at a discount.

One solution might be for the Fed to start lending money directly to consumers with good credit (above 700 FICO) at the current interest rates. The problem we are going through now isn’t so much a problem of cheap money, but of bad borrowers. If we restrict credit to people that manage their money it will get the country back on track much faster.

[kewp]

SD Realtor,

I’m very well aware of that. Which is why I’m not participating in my employers pension fund until this is over and taking care of my investments personally. Luckily I’m young enough (barely) and my expenses low enough to get away with this.

I’ll also comment that I don’t understand how people are getting the idea that the paper has no value. Some of us (like myself) pay our debts. Most people do. I suspect whats going to happen is they will take a big haircut (maybe 50%) before the vultures pick them up at a discount.

One solution might be for the Fed to start lending money directly to consumers with good credit (above 700 FICO) at the current interest rates. The problem we are going through now isn’t so much a problem of cheap money, but of bad borrowers. If we restrict credit to people that manage their money it will get the country back on track much faster.

[kewp]

SD Realtor,

I’m very well aware of that. Which is why I’m not participating in my employers pension fund until this is over and taking care of my investments personally. Luckily I’m young enough (barely) and my expenses low enough to get away with this.

I’ll also comment that I don’t understand how people are getting the idea that the paper has no value. Some of us (like myself) pay our debts. Most people do. I suspect whats going to happen is they will take a big haircut (maybe 50%) before the vultures pick them up at a discount.

One solution might be for the Fed to start lending money directly to consumers with good credit (above 700 FICO) at the current interest rates. The problem we are going through now isn’t so much a problem of cheap money, but of bad borrowers. If we restrict credit to people that manage their money it will get the country back on track much faster.

[kewp]

SD Realtor,

I’m very well aware of that. Which is why I’m not participating in my employers pension fund until this is over and taking care of my investments personally. Luckily I’m young enough (barely) and my expenses low enough to get away with this.

I’ll also comment that I don’t understand how people are getting the idea that the paper has no value. Some of us (like myself) pay our debts. Most people do. I suspect whats going to happen is they will take a big haircut (maybe 50%) before the vultures pick them up at a discount.

One solution might be for the Fed to start lending money directly to consumers with good credit (above 700 FICO) at the current interest rates. The problem we are going through now isn’t so much a problem of cheap money, but of bad borrowers. If we restrict credit to people that manage their money it will get the country back on track much faster.

[Anonymous]

Please tell me I am wrong…

It is (basically) over:

1.) Investors are getting scared about inflation, pressuring the Fed to raise rates.
2.) Investors are beginning to doubt that previous easing was enough to keep us out of recession, pressuring the Fed to lower rates.

If the Fed lowers rates, Treasuries will be massacred. If the Fed raises rates, this is tantamount to admitting defeat re the recession, Securities will be massacred.

I had thought this might last a bit longer, until it was obvious that the Fed was out of ammunition, but it turns out that they are like the British regulars at Isandlwana. Bad ammo. Here comes the assegai in the chest!

[Anonymous]

Please tell me I am wrong…

It is (basically) over:

1.) Investors are getting scared about inflation, pressuring the Fed to raise rates.
2.) Investors are beginning to doubt that previous easing was enough to keep us out of recession, pressuring the Fed to lower rates.

If the Fed lowers rates, Treasuries will be massacred. If the Fed raises rates, this is tantamount to admitting defeat re the recession, Securities will be massacred.

I had thought this might last a bit longer, until it was obvious that the Fed was out of ammunition, but it turns out that they are like the British regulars at Isandlwana. Bad ammo. Here comes the assegai in the chest!

[Anonymous]

Please tell me I am wrong…

It is (basically) over:

1.) Investors are getting scared about inflation, pressuring the Fed to raise rates.
2.) Investors are beginning to doubt that previous easing was enough to keep us out of recession, pressuring the Fed to lower rates.

If the Fed lowers rates, Treasuries will be massacred. If the Fed raises rates, this is tantamount to admitting defeat re the recession, Securities will be massacred.

I had thought this might last a bit longer, until it was obvious that the Fed was out of ammunition, but it turns out that they are like the British regulars at Isandlwana. Bad ammo. Here comes the assegai in the chest!

[Anonymous]

Please tell me I am wrong…

It is (basically) over:

1.) Investors are getting scared about inflation, pressuring the Fed to raise rates.
2.) Investors are beginning to doubt that previous easing was enough to keep us out of recession, pressuring the Fed to lower rates.

If the Fed lowers rates, Treasuries will be massacred. If the Fed raises rates, this is tantamount to admitting defeat re the recession, Securities will be massacred.

I had thought this might last a bit longer, until it was obvious that the Fed was out of ammunition, but it turns out that they are like the British regulars at Isandlwana. Bad ammo. Here comes the assegai in the chest!

[Anonymous]

Please tell me I am wrong…

It is (basically) over:

1.) Investors are getting scared about inflation, pressuring the Fed to raise rates.
2.) Investors are beginning to doubt that previous easing was enough to keep us out of recession, pressuring the Fed to lower rates.

If the Fed lowers rates, Treasuries will be massacred. If the Fed raises rates, this is tantamount to admitting defeat re the recession, Securities will be massacred.

I had thought this might last a bit longer, until it was obvious that the Fed was out of ammunition, but it turns out that they are like the British regulars at Isandlwana. Bad ammo. Here comes the assegai in the chest!

[OC Burns]

“Lets not forget either, the Fed is a PRIVATE BANK and their PRIMARY directive is PROFIT, so no return on their investments while underwriting the federal debt is NOT part of their plan.”

It is my understanding that the profits earned by the Fed are returned to the US Treasury. So unless their “profits” are hidden as operating expenses, it would seem to me that their primary motivation would be power, not money.

Do I misunderstand?

[OC Burns]

“Lets not forget either, the Fed is a PRIVATE BANK and their PRIMARY directive is PROFIT, so no return on their investments while underwriting the federal debt is NOT part of their plan.”

It is my understanding that the profits earned by the Fed are returned to the US Treasury. So unless their “profits” are hidden as operating expenses, it would seem to me that their primary motivation would be power, not money.

Do I misunderstand?

[OC Burns]

“Lets not forget either, the Fed is a PRIVATE BANK and their PRIMARY directive is PROFIT, so no return on their investments while underwriting the federal debt is NOT part of their plan.”

It is my understanding that the profits earned by the Fed are returned to the US Treasury. So unless their “profits” are hidden as operating expenses, it would seem to me that their primary motivation would be power, not money.

Do I misunderstand?

[OC Burns]

“Lets not forget either, the Fed is a PRIVATE BANK and their PRIMARY directive is PROFIT, so no return on their investments while underwriting the federal debt is NOT part of their plan.”

It is my understanding that the profits earned by the Fed are returned to the US Treasury. So unless their “profits” are hidden as operating expenses, it would seem to me that their primary motivation would be power, not money.

Do I misunderstand?

[Author]

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