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May 19, 2004
Fed's crutch propped up U.S. economy
Here's a big story that didn't happen: the U.S. economy did not collapse dragging down the rest of the world.
The "big story" was postponed several years.
The escape from calamity had many causes, including optimistic American consumers and the Bush tax cuts. But none mattered more than the Federal Reserve's policy of cheap credit.
Cheap credit postponed our problems.
"We didn't lose the jobs in automobiles and housing that we usually lose in a recession", says economist Allan Meltzer of the Carnegie Melon University.
Job losses were postponed and magnified.
Housing did even better...
Housing problems were postponed and magnified.
It is six years later, almost to the day, and this is where we are now.
May 10, 2010
Euro bailout sends FTSE soaring
Relief over emergency measures to prop up the euro and prevent Greece's debt crisis spreading across Europe sent London's FTSE 100 soaring more than 5% today.
Here's a big story that didn't happen: the European economy did not collapse dragging down the rest of the world.
"It does not solve the fundamental fiscal problems but it gives countries now several years for swift action."
Debt is once again being used to postpone ongoing debt problems.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
10 hours ago
4 comments:
This whole show is getting more unreal every day.
This whole show is getting more unreal every day.
It makes it hard to value my TIPS. They are based on "real" yields, not unreal ones.
A trillion dollars here and a trillion dollars there and pretty soon we're talking unreal money.
Stag,
Here's something else that didn't happen. The Euro Zone didn't bail itself out without Fed help. The Euro/IMF bailouts were done in CONjunction with the Fed re-opening currency swap lines.
That's not exactly a strong endorsement of the Euro as a currency.
Seriously, what kind of fiat currency isn't capable of bailing itself out? Maybe "printing money" is NOT the option many believe it to be.
When you think about it, debt money creation franchises are extremely valuable. Printing would jeopordize the CONtinuance of the most lucrative skimming operation in the world. They'll make the sheeple eat the bad debt for a generation before that happens. Not to mention our foreign creditors might start a war if they were paid in printed dollars.
I just don't see it. Mainly for the wrong reasons too.
mab,
When you think about it, debt money creation franchises are extremely valuable. Printing would jeopordize the CONtinuance of the most lucrative skimming operation in the world. They'll make the sheeple eat the bad debt for a generation before that happens.
Value meal
The perceived creation of a "discount" on individual menu items in exchange for the purchase of a "meal" is also consistent with the Loyalty Marketing school of thought.
If one simply assumed hyperinflation would soon be upon us, mortgages were good at any price.
Additionally, the term is based on value theory, which utilizes certain marketing tactics to encourage people to spend more money than they originally intended on their purchase.
Buy now or be priced out forever!
From 2005...
Housing Bubble -- or Bunk?
James F. Smith, chief economist at the Society of Industrial & Office Realtors:
There's no national bubble. You have to have a huge deflationary scenario to make a national bubble make any sense. The Fed isn't going to lose control of the money supply and take us back into a very significant deflation and cause a collapse in housing prices.
There are several reasons why a national housing bubble is relatively silly.
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