The problem is their credit analysts are not speaking to non Wall Street (read independent) energy analysts. These guys are talking $1 Trillion in write downs for Wall Street? I wonder if that is just the Investment Banks CDO/CMO portfolios they are talking about? IF every thing was hunky dory in Oil supply land, and; IF housing had not out of music in the great musical chairs game, and; IF Wall Street had another sector to turn to to replace the fees from mortgages, and; IF Detroit (the auto industry) were not going up in a puff of smoke... we would still have to concern ourselves with the negative feedback loops coming from:
- Increased Energy Costs
- Falling Energy Availability
- Increasing Values for the Chinese Yuan (increasing the rate of 1 and 2 as the price of energy to the Chinese falls in their currency driving up demand)
- Increasing defaults, which in turn increases supply of houses for sale, hurting prices
- Decreased economic activity ( oming from 1 and 2(, which decreases demand, hurting prices
The Fed is not going to sit by idlely while the housing market takes the country off a cliff. They will inflate something, ANYTHING, wildly, and in so doing destroy the value of the $. The Fed may, in my opinion inflate everything EXCEPT the one thing they need to inflate - and that is domestic wages. If they inflate commodity prices further and are unsuccessful in inflating U.S. wages....
Ka BOOOOOMMMMMM!!!!!!!!
More coming soon...
Mentatt (at) yahoo (d0t) com
1 comment:
Hi Greg,
I think we need to stop thinking in terms of money, costs, investments etc. In order to solve our economic problems, we need to start from scratch and decide what long term future we envision for US society. What are our basic needs? How can we take care of these needs by producing things locally and not relying on imports? Imports yes in principle but only if trade can be balanced every year. Once we decided on these questions, only then can we start to assign monetary values to economic activities. Right now, most economists think in terms of Dollars, most business section of newspapers are in essence reporting on financial markets. This is all bad. Economy is not finance. We need to start thinking economically and not financially. We do not need Dollars in order to survive. We need production of real goods and services in order to survive.
Robert Sczech
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