The difference is amount of debt outstading in the Gilded Age compared to today(or the great depression for that matter), you might want to read up on Fisher's debt deflation theory and Soros reflexivity
Japan's experience shows the folly of gov't intervention - trying to paper over this stuff by printing money, allowing banks to hide losses, and ridiculous gov't spending projects. Kind of sounds like exactly what our policymakers are up to right now. I completely reject the notion that a fall in a wide gage of prices is, in and of itself, a bad thing. FWIW, Tom Hoenig gave a speech last night in which he presented a brief and elegant rebuttal to that moron at the IMF who called for a higher inflation target.
I will be the first to say that its surprising that so many in the FOMC are thinking about asset sales. IIRC the last minutes the majority were pondering about more purchases with a few thinking about sales. I'm surprised the front end didnt sold off more
Quite frankly, I'm surprised either end sold off at all. Didn't seem like news to me - just some board hawks feeling their oats. We were talking about NLY earlier in the thread. I just saw some figures - its returned something like 470% since its 1997 IPO (which I participated in). S&P return is essentially flat since then. My IRR is much higher than that due to the fact that I've been reinvesting the divvies all along. That's a Buffet-like pick right there (thank you Jim Grant). Silly me. I've been doing all this work studying markets and buying rental props over the years when I just could have stuck it all in NLY in 1997 and gone off to Scottsdale to play golf for the next 12 years. Like I've always said, I only make two kinds of trades - 1. Those where I lose money 2. Those where I don't take large enough of a position!
From whom does NLY borrow and at what kind of rate? I much rather play the carry trade directly instead of paying a middleman. We will see Bernanke exit strategy testimony, then I will decide if I move from Jul ZQ to something more risky
They finance their portfolio in the repo markets. They use less leverage than their competitors. http://www.annaly.com/our-strategy.html If someone just wants to find a stock to ride the yield curve, they should buy one of the highly leveraged guys instead. I chose and stick w/NLY because I think they're fabulous managers who will protect my money no matter what the yield environment. They've been a compounding machine for me for over a decade. NLY is truly best in show. I'll probably name my retirement villa after them.
The key parts from the minutes seemed to be "Most thought that it likely would be appropriate to reduce the supply of reserve balances, to some extent, before the eventual increase in the IOER rate and in the target for the federal funds rate, in part because doing so would tighten the link between short-term market rates and the IOER rate; however, several noted that draining operations might be seen as a precursor to tightening and should only be undertaken when the Committee judged that an increase in its target for the federal funds rate would soon be appropriate. For the same reason, a few judged that it would be better to drain reserves concurrently with the eventual increase in the IOER and target rates." "Most judged that a future program of gradual asset sales could be helpful in shrinking the size of the Federal Reserve's balance sheet, reducing reserve balances, and shifting the composition of securities holdings back toward Treasury securities; however, many were concerned that such transactions could cause market disruptions and have adverse implications for the economic recovery, particularly if they were to begin before the recovery had become self-sustaining and before the Committee had determined that a tightening of financial conditions was appropriate and had begun to raise short-term interest rates" "Several thought it important to begin a program of asset sales in the near future to ensure that the Federal Reserve's balance sheet shrinks more quickly and in a more predictable manner than could be achieved solely by redeeming maturing securities and not reinvesting prepayments; they judged that a program of asset sales spread over a number of years would underscore the Committee's determination to exit from the period of exceptionally accommodative monetary policy in a manner and at a pace that would keep inflation contained without having large effects on asset prices or market interest rates. A few suggested that the pace of asset sales, and potentially of purchases, could be adjusted over time in response to developments in the economy and the evolution of the economic outlook. The Committee made no decisions about asset sales at this meeting." Several seems less than most, still its worrying that 'several' are thinking about asset sales in the 'near future'. In the other hand 'many' "were concerned that such transactions could cause market disruptions and have adverse implications for the economic recovery, particularly if they were to begin before the recovery had become self-sustaining" Many is probably more than several but I'm not sure It seems that the scale is Most Many Several A Few The hawkishness is concentrated in the several part
Couldn't asset sales be a boon for anyone long FF futures or GE calls? Its possible that these could cause a widening in MBS spreads and a rise in mortgage rates, thus having a slowing effect on the economy, thus making it less likely that short end rates go higher.
'several noted that draining operations might be seen as a precursor to tightening and should only be undertaken when the Committee judged that an increase in its target for the federal funds rate would soon be appropriate. For the same reason, a few judged that it would be better to drain reserves concurrently with the eventual increase in the IOER and target rates.' The problem is if the 'a few' becomes 'most'