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Thank you for the links. I did hear a few blips on the tube regarding Mr. G's new thinking. Part of his new write; is what I still feel is the "new normal" and it continues its path down the road. The "unwind" is not finished for debt and deleveraging by the general public and governments. I am a bit surprised with his rework of thinking, as I continue to feel the current events related to bonds, the money of the global; is a continued part of the "new normal". Not unlike the event of 1989, with the tear down of the Berlin Wall; one should not expect that the very next day, all old Soviet bloc countries would be magically transformed into new societies. Such great shifts in government, corporate and societal events take time to find and weave their own paths going forward. The recent "cheap money" 3 year loans available from the ECB, to EuroZone banks had a thought that the banks taking this money would buy EZ bonds from their neighbor countries. This has not happened. The EZ banks have placed the monies back into the ECB to float a bit of an interest rate flip, not unlike the cheap monies available to U.S. banks, who in turn used the money to buy Treasury issues with a higher yield and obtain a spread/profit to themselves, but not actually loaning the cheap money into the public sector. As Rono has noted; what bank in their right mind wants to lend money on a 30 year mortgage at 4%. Any such loan will have to go back through the government mortgage programs, but the mortgage surely will not be held by a bank.....not that many were 5 years ago. Money supply for loans and related is still very tight in Europe, including over-night and other short term loans between/among banks; and also loans to developing countries; of which, the EZ banks were the main sources. Tight and/or scared money is not good. NOTE: Bank of America recently announced a reduction of available loans to small businesses in the U.S.
'Morning, Catch- you mention ("but not actually loaning the cheap money into the public sector") something that I've been thinking for a while now... that while the banks may be acting in their own present self-interest, in the end this may actually turn out to be a good thing, as money just sitting in a bank does not really act in the marketplace to drive up inflation.
This whole thing, though, is like a house of mirrors, or maybe one of those layered Russian dolls, and tends to make one just a little crazy.
(1) Did (does) the government fully expect this to happen, and are making money available to the banks just to help the damned banks?
(2) Or was (is) the government so dumb that they didn't see this coming?
(3) Or, if (1) is true, does the government think that when they finally allow interest rates to start creeping up a bit, that all of that potentially available loan money will finally break loose and really goose the economy? And that they can stop the inevitable expansionary/inflationary breakout in time to avoid serious damage?
Then of course we have to wonder if the US government and the EZ governments are actually coordinating their policies in the common interest, or are they actually playing games with each other? And then we also have to factor in the actions and reactions of other sizable independent economies: Brazil, Japan, Canada, Australia, and of course China. Man, what a house of cards!
Seems to me that the US has a real advantage on the playing field right now, as unlike Germany, the US doesn't have any other major constituents to worry about, except maybe for California and Michigan(
And irony of ironies! Here's Germany, the historical cause of so much grief, now in a real jam as the economic "leader" of the pack. Talk about "you can't win!". Actually, kind of funny in one respect: Germany really didn't want anything to do with Greece during WW2, but was forced to go in there after their buddies in Italy totally screwed up their ill-advised adventure. At this point Germany must (again) wish that both Italy and Greece would just disappear somehow.
The thing about fiat "money", as I've learned from that great book "The Power of Gold" recommended to me by Investor, is that it doesn't work worth a damn unless there is only ONE responsible central issuing authority. (With "" around "responsible"). At least the US has that going for it.
And of course there is a pretty healthy body of opinion that holds that fiat money doesn't work worth a damn under ANY circumstances. Unfortunately there's plenty of evidence that gold and silver don't work so hot either. That doesn't leave much.
Comments
Thank you for the links. I did hear a few blips on the tube regarding Mr. G's new thinking. Part of his new write; is what I still feel is the "new normal" and it continues its path down the road. The "unwind" is not finished for debt and deleveraging by the general public and governments. I am a bit surprised with his rework of thinking, as I continue to feel the current events related to bonds, the money of the global; is a continued part of the "new normal". Not unlike the event of 1989, with the tear down of the Berlin Wall; one should not expect that the very next day, all old Soviet bloc countries would be magically transformed into new societies. Such great shifts in government, corporate and societal events take time to find and weave their own paths going forward.
The recent "cheap money" 3 year loans available from the ECB, to EuroZone banks had a thought that the banks taking this money would buy EZ bonds from their neighbor countries. This has not happened. The EZ banks have placed the monies back into the ECB to float a bit of an interest rate flip, not unlike the cheap monies available to U.S. banks, who in turn used the money to buy Treasury issues with a higher yield and obtain a spread/profit to themselves, but not actually loaning the cheap money into the public sector.
As Rono has noted; what bank in their right mind wants to lend money on a 30 year mortgage at 4%. Any such loan will have to go back through the government mortgage programs, but the mortgage surely will not be held by a bank.....not that many were 5 years ago.
Money supply for loans and related is still very tight in Europe, including over-night and other short term loans between/among banks; and also loans to developing countries; of which, the EZ banks were the main sources. Tight and/or scared money is not good. NOTE: Bank of America recently announced a reduction of available loans to small businesses in the U.S.
More here from January 2:
http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/1863/signs-along-the-investment-highway-contrarian-curve-aheads-...../p1
Ok, my morning coffee is starting to wear away.
Take care,
Catch
This whole thing, though, is like a house of mirrors, or maybe one of those layered Russian dolls, and tends to make one just a little crazy.
(1) Did (does) the government fully expect this to happen, and are making money available to the banks just to help the damned banks?
(2) Or was (is) the government so dumb that they didn't see this coming?
(3) Or, if (1) is true, does the government think that when they finally allow interest rates to start creeping up a bit, that all of that potentially available loan money will finally break loose and really goose the economy? And that they can stop the inevitable expansionary/inflationary breakout in time to avoid serious damage?
Then of course we have to wonder if the US government and the EZ governments are actually coordinating their policies in the common interest, or are they actually playing games with each other? And then we also have to factor in the actions and reactions of other sizable independent economies: Brazil, Japan, Canada, Australia, and of course China. Man, what a house of cards!
Seems to me that the US has a real advantage on the playing field right now, as unlike Germany, the US doesn't have any other major constituents to worry about, except maybe for California and Michigan
And irony of ironies! Here's Germany, the historical cause of so much grief, now in a real jam as the economic "leader" of the pack. Talk about "you can't win!". Actually, kind of funny in one respect: Germany really didn't want anything to do with Greece during WW2, but was forced to go in there after their buddies in Italy totally screwed up their ill-advised adventure. At this point Germany must (again) wish that both Italy and Greece would just disappear somehow.
The thing about fiat "money", as I've learned from that great book "The Power of Gold" recommended to me by Investor, is that it doesn't work worth a damn unless there is only ONE responsible central issuing authority. (With "" around "responsible"). At least the US has that going for it.
And of course there is a pretty healthy body of opinion that holds that fiat money doesn't work worth a damn under ANY circumstances. Unfortunately there's plenty of evidence that gold and silver don't work so hot either. That doesn't leave much.
And so it goes on, forever and ever, amen...
OJ