Thoughts from a fellow Team-member

Look out the expiry has past, the dollar is broke up through $1.30 to the euro this morning. If the Fed doesn’t jump on it with both feet – I would be very surprised. Seems that they all like the $1.33 peg.

Mishkin was on CNBC this morning saying the banks will need more money because we don’t want to end up like Japan but without the savings. I should say not!

I think it is more likely that global community is looking for a bailout. :-)

Funny how a bank will never take a loss.

Now, it is likely know that the deceleration of the velocity of money will cause credit contraction and some ‘good’ debt destruction as the corporations will pay off debt because they can’t roll the debt over. The down side is that they had built a ‘cash’ cushion back in 1999-2006 time frame and spent a lot of it in stock buyback schemes designed to support the corporations stock price (and not incidently, the value of compensation options).

So blame it on the housing bubble if you want to but the stock market merely reverting back to it’s mean because they stopped the decline in price by reducing the number of shares outstanding. Now, they can’t roll their debt, they have no cash for operational shocks and the shares are in the tank.

Don’t you just love it when a fancy suit cashs out just before the news hits the wire? The karmic b-slap is a real doozy though.

Market should suck mud in the morning and make a miraclous recovery later. I am afraid that we are looking at a ‘lower high’ and lower low scenario to play out moving through 2009 with some sort of head fake resolution towards the middle of 2010 to catch the election cycle.

Current models from my friend say that there is continuing decent probablity of severe debt destruction/credit contraction. He thinks the big banks are broken which waterfalls down to the corporations and small countries that rely on rolling over debt. This is in-line with what I am seeing in the credit markets.

Just so you know, it is going to be a bumpy 3 or so years and never in a straight line.

We live in historic times … this is a era, not an event. I’m seeing more and more people that are sick of this and want it ‘fixed’ … it doesn’t work that way.

amazing how the banks are cooking their books and expect to fool everyone. I guess our new leader is showing his true self….

Oh, I don’t think that they are trying to ‘fool’ anyone … just misinform the uninformed, if you know what I mean.

The real danger is in the insurance companies, the big publicly traded ones. The ones that make stoopid bets right before quarter end so they hit their ‘numbers’. Yeah those.

Turns out the intended benefits of the FASB 157 rule change is the insurance industry, the banks benefit but only to the point where the cash flow model is higher then the bid on their non performing.

It’s complex but lets just say that pensions and insurance schemes may be problematic for the next few years………