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**Quiniacab** · 09-17-2008, 10:53 PM

If you say so.

They're trying to get their hands on as much as they can. Of course you'd have to read a foreign paper to find out.

Not sure I buy it. Remember, the Fed's first option was to encourage JPM and Goldman to extend the loan to AIG, and only stepped in AFTER the private sector declined to do so. Also remember, the Fed DID allow Lehman to fail.

I do not think the Fed wants to be in the business of running businesses or speculating on the share price of companies in duress. I think they will be very judicious in executing the tactic going forward.

If you say so.
It's a self fulfilling prophesy. Investors will flee the market with the spectre of a total bank confiscation (without due process or just compensation for deprived shareholders -- of course the US Constitution only limits the government not the Fed's theft through inflation, market manipulation or outright seizure.)

find out.This whole calamity was caused by the Fed's easy money policies that spawned innumerable exotic derivatives which rating agencies blindly rubber-stamped triple-A thereby allowing them to infect balance sheets around the world. The Fed has done their best to keep the light of day off this questionable paper, delaying and impeding the needed downgrading until it was too late, at which point only Fed sponsored conservatorship would do.

The Fed becomes more empowered as a result of its mistakes?

It is important to note that derivatives were introduced in the 1980's as a tool to syndicate and avert risk. The idea was to package a broad spectrum of high and low risk debt instruments so as to diversify exposure and ensure against catastophic loss. Back than, brokerages were high margin businesses who derived the lion share of their revenues by advising and investing other people's money. Today it is much different. The advent of electronic brokerage services and the direct access it has afforded retail investors has undercut the margins of classical brokerage services and necessitated a need for additional revenue sources. Today's brokers are much more leveraged than they were at anytime in the past, and the derivatives they have created and invested in are of higher yield and higher risk than previously. Sub-prime MBS paper is an example.

The Fed's easy money policies are a direct result of the real estate bubble bursting. So much or US growth and wealth over the past 10 years or so has been fueled by over valued real estate. When the bubble burst, credit tightened, and the economy began to slow as companies struggled to gain access to working capital and longer term investment funding. The Fed dealt with it by lowering rates.

And as rates go down and the national debt goes up, the value of the $ suffers. It is a real mess.

09-17-2008, 10:53 PM	#44
Quiniacab Join Date Oct 2005 Posts 509 Senior Member	If you say so. They're trying to get their hands on as much as they can. Of course you'd have to read a foreign paper to find out. Not sure I buy it. Remember, the Fed's first option was to encourage JPM and Goldman to extend the loan to AIG, and only stepped in *AFTER* the private sector declined to do so. Also remember, the Fed *DID* allow Lehman to fail. I do not think the Fed wants to be in the business of running businesses or speculating on the share price of companies in duress. I think they will be very judicious in executing the tactic going forward. If you say so. It's a self fulfilling prophesy. Investors will flee the market with the spectre of a total bank confiscation (without due process or just compensation for deprived shareholders -- of course the US Constitution only limits the government not the Fed's theft through inflation, market manipulation or outright seizure.) find out.This whole calamity was caused by the Fed's easy money policies that spawned innumerable exotic derivatives which rating agencies blindly rubber-stamped triple-A thereby allowing them to infect balance sheets around the world. The Fed has done their best to keep the light of day off this questionable paper, delaying and impeding the needed downgrading until it was too late, at which point only Fed sponsored conservatorship would do. The Fed becomes more empowered as a result of its mistakes? It is important to note that derivatives were introduced in the 1980's as a tool to syndicate and avert risk. The idea was to package a broad spectrum of high and low risk debt instruments so as to diversify exposure and ensure against catastophic loss. Back than, brokerages were high margin businesses who derived the lion share of their revenues by advising and investing other people's money. Today it is much different. The advent of electronic brokerage services and the direct access it has afforded retail investors has undercut the margins of classical brokerage services and necessitated a need for additional revenue sources. Today's brokers are much more leveraged than they were at anytime in the past, and the derivatives they have created and invested in are of higher yield and higher risk than previously. Sub-prime MBS paper is an example. The Fed's easy money policies are a direct result of the real estate bubble bursting. So much or US growth and wealth over the past 10 years or so has been fueled by over valued real estate. When the bubble burst, credit tightened, and the economy began to slow as companies struggled to gain access to working capital and longer term investment funding. The Fed dealt with it by lowering rates. And as rates go down and the national debt goes up, the value of the $ suffers. It is a real mess.
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