Simpsons

[cottonpicken]

I remeber where everyone was before the turmoil.

And now your opinion counts?

[parsley]

What? You allergic to opinions? LOL

[bduke]

Parsley.... you said that in a year's time you can see
interest rates passing 24%..... and you offered a
bet.

5 quarters from now is Oct. 2010....

9 quarters is 2011...

I have only 2 euros... and I am willing to bet 1 for
each October... or 1 loonie each or?... that neither
October will you receive more than 12% on your
GIC's.

I remember the PRC, and other countries publicly
stating that the $US will remain the reserve
currency about a month ago.

Shortly after the CEO of the Republic Bank of China
publicly stated he was concerned the $US would
devalue too greatly and undermine the PRC's $US
deposits.

This strategy caused Bernanke to explain how the
$US would not hyper inflate.

Here is a short summary of Bernanke's response:

The Fed exit strategy is closely tied to the
management of the Fed Reserve balance sheet.

The Fed loans to the Scheduled Banks mostly
remained in the Fed Res as reserves for their write
offs.

As the economy recovers the Sch. Banks will lower
their reserves.

The Fed has a four point strategy.

- the Fed could drain the Sch. Banks's reserves by
reverse repurchase agreements. ( this effectively
reduces the capital from which lending multiples
depend upon.... my expl.)

-The Treasury could sell bills and deposit the
proceeds with the Fed. ( which they have been
doing) When the Sch. Banks ...purchasers... pay for
the securities the Treasury account will rise and the
Sch. Bank's accounts will decline.

-The Fed can pay interest on Sch. Bank balances ...
as in Term Deposits... and these deposits would not
be eligible for the federal funds market.

-the Fed could reduce reserves by selling into the
open market.

Each of these policies would help raise short term
interest rates and limit growth of broad measures
of money and credit, thereby tightening monetary
policy.....

So says Bernanke.

I think they will be partially effective... but only
partially.

However .... with the commercial real estate mess,
the US job losses still rising...

and the reduction of hours worked by many still
employed.... the bankruptcy of over 3000 US
banks....

the reduction of lending multiples by at least 1/3....

and Europe also in the soup, and even slower to
address the problems...

and consumer's spending habits and lifestyles
adjusting... and their saving's accounts increasing

That this recession is farther from being over than
our politicians wish us to believe!

BTW Parsley... I wouldn't make this bet for 2012...
lol

Cottonpicken.... I am probably wrong... I hope ...

What interest do you foresee Parsley receiving on
her GIC's in October 2010... and October 2011?

Bill

[parsley]

You're presuming GIC's are a permanent condition, aren't you? They're not.

You are also presuming I will bet more than a Euro. I won't

You're presuming the rules will change. They won't.

The moral of this penlash? Don't presume.

[bduke]

Parsley.... I suggested GIC's because they are
closely competitive between Institutions and are
transparent... and are not normally based from
minimum lending rates plus 1...2...3...4..5.. and so
on... per cent.

I was expecting you would bet $1 as you had
previously stated.

What rules are there to change?... I am offering you
a longer period to recover from October 2010, and
for my math screw up last night.

I was not being at all presumptuous...

Forget the whole deal....

The moral of this response is that I must remember
school teachers make up all the rules or they are
very unhappy!!... lol... Bill

[vagabonddreamer]

what if...the HUGE amount of fiscal meddling by the "FEDS" across the board INCLUDING china...is chaotic enough that it throws all economic modeling out the window...there is NO sign they plan to back off...they KNOW the global economy can not survive with even a 12% effective interest rate...

the things we need to figure out...WHEN will the interest rate spike happen...but more importantly...WHAT will precipitate the push upwards?? what will finally push the system past safeguards and into uncharted hyper-inflation?? many pundits (some on this site) predicted that this should already have happened...there IS an economic facade currently veiling some fundamental mechanical problems...but it doesnt appear to be an event that will happen any time in the very short term...

so...WHAT will be the defining moment??

lol..just remember...opinions cant be wrong...vs

[parsley]

Restraint $1.00 = Only one bet.

You cannot arbitrarily call a deal off. You agreed to the bet. The deal is on. And don't forget it. LOL

[bduke]

Parsley.... speaking of restraint.... you are exercising it
wonderfully!!.... lol

The bet is on.... Bill

[bduke]

Vagabonddreamer.... If I knew the answers to your
queries, I would keep them proprietary!...lol

However... I see the G10 still more concerned with
deflation than inflation....

As much as many politicians and central bankers
try to accent the positives, the unemployment
numbers... just think of the auto industry
downsizing, globally ex China.... the credit card
defalcations.... the travel industry woes... the
commercial real estate open spaces.... etc. suggest
to me that times are not as positive as we need
them.

Also, when economic recoveries begin employment
lags the other data. It seems jobs are quickly
reduced and slowly rebuilt.

I think the US economy was 17% production and
83% consumption in 2007... don't know the
numbers now.

I think taxation will be the demon in North
America... in various forms.

I am too beaten up by Parsley tonight to have much
of an opinion... and Cottonpicken hasn't started!

LOL.... Bill

[cottonpicken]

http://www.marketwatch.com/story/story/print?guid=F22AA21D-1069-4E39-B359-6BCA58140C0D


This weeks bond auction will be interesting.They only need to come up a couple hundred billion.Thats something like 12 trillion annualized.
And deflationists think things are going to get cheaper.