the Fed is toothless since you can borrow money in Japan for 0.5% and lend it to New Zealand at 8.5% where's the Fed. in all this unless they (at some point) will really have to compete for the flow of funds........
haha, i kinda wanna go back to school and say the pledge of allegiance how it REALLY is... Everyone would look at me like WTF? I'd just laugh my ass off..
its just a brief wakeup call to what is happening in the world. If you look at the indians, chinese, they sleep less, eat less, work twice as hard, and demand half or less in compensation. How can you compete with that? and thats why the wealth transfer is progressing. Basically there is really no true industry in america. Eventually the erosion will continue. Till our kids start working harder to be smarter instead of worrying about fluff. I'm looking around the house to find an american product I use, and I cant find any except the house itself. Everything and everywhere I look, its all made overseas. Its not sustainable. The APPLE computers and HPQ products, seem american but even that stuff the sub components are made overseas. America itself is the only product that is saving it from its downfall. The day to day living standards and infrastructure is what attracts immigrants to this country. It is still relatively less corrupt then the rest of the world. And the liberties in this country are unsurpassed. Except for the Europeans, most of the world doesn't enjoy the relative safety from persecution. In terms of military expenditure, we still outpace everyone, we can create disorder globally to support the dollars purchasing power. Without global unrest, the dollar would depreciate at a faster rate over the decades then it is doing now. Just think how much time your kids spend studying relative to the Indian and Chinese kids. Ultimately this is where it stands, if you don't work for your quality of life, you will loose it, and eventually we will become like the French, demanding a higher quality of life without working for it.
"Except for the Europeans, most of the world doesn't enjoy the relative safety from persecution. are you serious? http://www.reuters.com/article/newsOne/idUSL1919223520070719
Look - fixed income instruments aren't like stocks. Those BBB- may not get bid (which is somewhat unlikely for the exact reason I'm about to give), but it goes generate coupon income (and pretty fat ones) so long as physical defaults haven't wipped out the paper. So, hypothetically - the BBB- paper in question pays 8% coupon. Obviously, I'll be happy to bid some positive value if I assume all of it won't default before the next coupon date. Moreover, a lot of these papers have recovery value upon default (5%, 10% or lower for crap papers, but could be 80%+ for certain bank loans), then I'll happily bid the recovery value. Before the mob goes all nuts about CDOs - realize that these instruments made it possible to shift risk in a way that when the pains do start (like now), a few risk-seeking players may get hurt, your insurance, monoline, pension fund portfolios are far better off than they would have been without the subordination.