Financial topics

[vincecate]

Looks like the interest rate up trend is still in tact. This can not go on for months on this trend without a stock market crash.

interest.gif (10.16 KiB) Viewed 3315 times

[at99sy]

Low interest rates were a financial death trap. Once they go up it all falls down. I am curious at where the tipping point will be. Millions still have ARM's and this will severely impact refi's and also will drive down the price of homes new and existing. If you can only afford a certain amount of monthly payment then each tick up on the rate will drive down the sales price of the home you can afford. Unless the banks turn loose the trillions $$ they have been hoarding and pumping into stocks and dump it back into mortgages the housing market will be killed off finally. But that would lead to a collapse of the stocks, then there is the bond market.....interest rates will drive things up and people out. Done. My guess is BB will be replaced before it all goes to hell.

cheers
sy

[Higgenbotham]

http://www.google.com/#output=search&sc ... 00&bih=398

Click here then follow the link to access the article in full.

Ronald McKinnon: The Near-Zero Interest Rate Trap
If long-term rates rise to normal levels, banks holding government bonds would be de-capitalized—a disaster.

He then goes on to explain why Bernanke must raise short term interest rates.

"By trying to stimulate aggregate demand and reduce unemployment, central banks have pushed interest rates down too much and inadvertently distorted the financial system in a way that constrains both short- and long-term business investment. The misnamed monetary stimuli are actually holding the economy back.

The way out is for major central banks—the Federal Reserve, the Bank of England, the Bank of Japan and the European Central Bank—to begin slowly increasing short-term interest rates in a coordinated way to some common modest target level, such as 2%. Coordination is crucial to minimize disruptions in exchange rates. They should also phase out bond buying so that long-term interest rates once again become determined by markets.

Paradoxically, such modest increases in interest rates could actually stimulate investment and growth in all four economies."

Mr. McKinnon, a professor at Stanford University and a senior fellow at the Stanford Institute for Economic Policy Research, is the author of "The Unloved Dollar Standard: From Bretton Woods to the Rise of China" (Oxford University, 2013).

A version of this article appeared July 30, 2013, on page A15 in the U.S. edition of The Wall Street Journal, with the headline: The Near-Zero Interest Rate Trap.

[vincecate]

Ronald McKinnon: The Near-Zero Interest Rate Trap
If long-term rates rise to normal levels, banks holding government bonds would be de-capitalized—a disaster.

He then goes on to explain why Bernanke must raise short term interest rates.

Interesting article. He seems to think you could raise short term interest rates without causing long term interest rates to go up. I can't imagine why he would think this and I really don't think so. There is no good way out at this point...

[vincecate]

Another report came out from the bank of Japan. They increased their base money supply by 2.6% in the 11 days from July 20 to July 31.

People, this is out of control money printing. It is panic bond selling with the central bank the only buyer. This is how hyperinflation starts. It just can not be long now.

http://howfiatdies.blogspot.com/2013/05 ... ng-at.html

I might be the only person who thinks that increasing the money supply by 2.6% in 11 days is a big deal. Can't find another blog post other than "as they promised they are increasing the money supply". Nothing like, "oh my God these idiots don't realize how crazy this is".

I think when 2.6% of the bond holders dump their bonds in 11 days we will probably look back and call this period a "bond panic".

[Higgenbotham]

Interesting article. He seems to think you could raise short term interest rates without causing long term interest rates to go up. I can't imagine why he would think this and I really don't think so. There is no good way out at this point...

I read the article 3 times to try to figure out what he's really saying and why he wrote it, because I know he can't say what he really thinks.

What I think he is saying is:

• That these bubbles, caused by interest rates that are too low, are sucking the life out of the small businesses and small banks, and have also affected the large businesses.
  That bonds are in a bubble and everyone knows it; therefore, nobody wants to make additional business loans or corporate bond purchases because they know when the bubble pops they will get destroyed.
  If nobody wants to buy the bonds of the large corporations the large corporations have the option of issuing commercial paper but that has its limits as MM funds are wary of breaking the buck.
  Bernanke is going to have to reverse his error by very slowly and carefully popping the bubbles by raising short term interest rates so as to not cause the bubbles to crash violently.
  The market has shown that the bond bubble can crash violently because it just gave a preview of that.
  That the Fed must get out of the business of manipulating long term interest rates.
  If Bernanke doesn't do this, the economy and the banks will be destroyed.
  If he does do this, the economy will be better off than it would be if he doesn't.

That's my take on what he really said; if anyone thinks differently let us know.

[aedens]

They do not care Higg. The kill switch machine of political payback mentality damn near put us in a the dark ages and still these retards deny reality.

http://www.sourcewatch.org/index.php?ti ... ite_note-2

Total Amount: $1,971,468
Total to Democrats: $216,052 (11%)
Total to Republicans: $1,755,416 (89%)
Number of PACs making contributions: 16
https://www.opensecrets.org/pacs/category.php?txt=E1210
These people only care about getting reelected 200 for years.

http://pjmedia.com/andrewklavan/2013/07 ... rat-women/

This is for the forty seven percent of the red and blue death cult.
http://www.irs.gov/pub/irs-pdf/f2290.pdf
http://www.irs.gov/publications/p510/ch02.html

[Higgenbotham]

From what I can figure, the Stanford professor didn't say anything substantially different from what we've been saying for 3 years. Apparently Bernanke didn't know anything was wrong until the bond market panicked. Looks to be a repeat of August 2007 except the scope of the mess is larger. There was a way out in 2007 or even into the first half of 2011 but now there is not. The way out as late as 2011 was to do what the professor is suggesting be done, but now it's too late. That's my take anyway. Dark Age here we come.

[aedens]

From what I can figure, the Stanford professor didn't say anything substantially different from what we've been saying for 3 years. Apparently Bernanke didn't know anything was wrong until the bond market panicked. Looks to be a repeat of August 2007 except the scope of the mess is larger. There was a way out in 2007 or even into the first half of 2011 but now there is not. The way out as late as 2011 was to do what the professor is suggesting be done, but now it's too late. That's my take anyway. Dark Age here we come.

http://www.zerohedge.com/news/2013-08-0 ... d-anything
From the educated as we get screwed by these fish heads.
http://www.zerohedge.com/news/2013-08-0 ... t-template

[Higgenbotham]

a, I pulled out when it dipped after the cash close. I was able to make 3 points today so am down 23 now on the partial. Anyway, the reason for this post: I believe the correct count in comparison to 2011 is to start from the lower high at the end of May and move 49 trading days. That takes it to Tuesday, August 6, and confirms your window. That's the match to May 2, 2011. I will probably try to go in fully short early next week.