The flattened yield curve is evidence that cost inflation, non-existent pricing power, and absent wage growth all stem from the Feds premeditated attempt to generate price inflation.
In addition, an enormous amount of interest-rate hedging was put in place that was, in reality, untenable.
I would assert that the Feds warnings of higher rates and the markets rational reaction (large-scale hedging and bearish speculating) assured either a self-reinforcing downward spiral in bond prices (spike in rates) or an unfolding major squeeze, a derivative unwind, and destabilizing drop in rates.
Much like the final upward death spike of the NASDAQ 2000, we are now witnessing the latter....a short-squeeze and unwind of interest-rate hedges throughout the Credit market.
Our interpretation is that because of the leverage due to Credit there is more and more money chasing for investment and less and less used in consumption. This is why we advocate the X-it of credit based economy. Visit our blog: Chairman Alan Greenspan's Conundrum.
Hi mr.Greenspan December 7,2005
It is ok with me and the general public to increase those short measured interest rates,but under all circumstances,please make sure to leave those long term interest rates
at these levels for the next 5 to 10 years,as I have to renew all thwe mortgages on my many apartment and Business buildings over the next 5 years.Even the bank Manager who I
always take out for free lunch
enjoys when I come in to start to renew those mortgages on my 898
buildings.
Mr.Greenspan and His successor Please keep up your good work
The flattened yield curve is evidence that cost inflation, non-existent pricing power, and absent wage growth all stem from the Feds premeditated attempt to generate price inflation.
In addition, an enormous amount of interest-rate hedging was put in place that was, in reality, untenable.
I would assert that the Feds warnings of higher rates and the markets rational reaction (large-scale hedging and bearish speculating) assured either a self-reinforcing downward spiral in bond prices (spike in rates) or an unfolding major squeeze, a derivative unwind, and destabilizing drop in rates.
Much like the final upward death spike of the NASDAQ 2000, we are now witnessing the latter....a short-squeeze and unwind of interest-rate hedges throughout the Credit market.
Our interpretation is that because of the leverage due to Credit there is more and more money chasing for investment and less and less used in consumption. This is why we advocate the X-it of credit based economy. Visit our blog: Chairman Alan Greenspan's Conundrum.
Hi mr.Greenspan December 7,2005
It is ok with me and the general public to increase those short measured interest rates,but under all circumstances,please make sure to leave those long term interest rates
at these levels for the next 5 to 10 years,as I have to renew all thwe mortgages on my many apartment and Business buildings over the next 5 years.Even the bank Manager who I
always take out for free lunch
enjoys when I come in to start to renew those mortgages on my 898
buildings.
Mr.Greenspan and His successor Please keep up your good work