http://market-ticker.denninger.net/2008/02/most-important-ticker-you-will-read.html In fact, The Fed is actually taking down risk, as I have said repeatedly, and de-leveraging not only their own balance sheets but they are also forcibly taking down risk in the primary dealers - whether they like it or not! Now we know - for a fact - why Citibank had to go to the Arabs for money at double-digit rates. Why the other money-center banks are issuing preferreds and other instruments with returns at more than double the interest coupon required to borrow through the primary Fed credit facility (whether it be the TAF or the Discount Window.) We know know the facts of life: Fact: The good collateral has all been pledged. Fact: The margin credit supply has been decreased. Fact: Risk capacity is being withdrawn actively by The Fed. Fact: The money supply is deflating. http://www.ny.frb.org/markets/omo/omo2007.pdf Page 16 My comments, on this delfation signal STOCKS, PROPERTY will sink...
Check out the graph on page 21 of the Fed report, Chart 13, "Quarterly Average Levels of Total RPs Outstanding By Collateral Type". Look at the last bar Q4 2007. The total jumped up to $45 Billion from $30 Billion in Q3, and the MBS piece is 1/3. Read the footnote too.
So money supply is deflating, when the interest rates are going down... they might be running the country into a scenario similar to japan in the 90's... were interest rates at virtually 0% where unable to stimulate demand.
Inflation, deflation, nothing but games played by the rich and powerful, i.e. CEO's and politicians, and yet people still think Hillary, Barack, or John will their fate. wake up ET, america, and the world, the bankers are stealing your money and you want to elect who???? http://www.elitetrader.com/vb/showthread.php?s=&threadid=117447