The Credit Crisis Financial Stocks Short Journal

Seems that a ton of people called for a US recession back in 2007 based on the housing bust. Now it looks like housing is going down again, how come so few are in the double dip camp?The bust will be smaller for sure, but real final sales are also weaker right now(1.5% avg or something), furthermore credit is way tighter than then

I'm my view, there is a 50% chance of a double dip, based on the almost triggering of the hussman model plus the housing factor. And that could be conservative
 
I suppose the difference between 2007 and now is that mortgage equity withdraws are much tighter in terms of bank standards so there is less to be taken off consumer spending. Still, if prices drop 10% that cant have a zero impact of gdp growth, it gotta hurt at least a little bit
 
I dont understand what Soros is saying with regards to Germany. He seems to agree with the budget deficit cuts

"What would be the right policy for Germany to pursue? It cannot be expected to underwrite other countries' deficits indefinitely. So some tightening of fiscal policies is inevitable. "

But he also wants fiscal spending
"By cutting its budget deficit and resisting a rise in wages to compensate for the decline in the purchasing power of the euro Germany is actually making it more difficult for the other countries to regain competitiveness.

Generally speaking, this is the time to put idle resources to work by investing in education and infrastructure. For instance, Europe needs a better gas pipeline system and the connection between Spain and France is one of the bottlenecks. The European Investment Bank ought to be able to find other investment opportunities as well."

But it also appears that he is targeting the criticism to the ECB
"Before any actual policy steps can be discussed, two theoretical points need to be made. One is that a tightening of fiscal policy can be offset by a loosening of monetary policy. For instance, the ECB could buy treasury bills directly from countries that cannot borrow from the market at reasonable rates, significantly reducing their financing costs below the punitive rate charged by the German inspired European Financial Stabilization Fund. But that is not possible without a change of heart by Germany."

This could be a similar formula to be followed in the US and UK. Tighten fiscal policy gradually but loosen monetary and keep it loose for longer. The central banks can be trusted to withdraw the stimulus in a timely fashion more than congress or parliaments
 
Heres an article drawing a parallel between the US and Japan
http://www.northerntrust.com/pws/js...c=primary/resource/1006/1277240774967_734.xml

I believe it has a flaw though. They seem to think the bank lending are needed to keep M2 growing at a healthy peace. They just need to ask themselves "How come the Fed purchasing $1.7T worth of assets only increased excess reserves by $1T?". M2 will be whatever the Fed wants it to be, as a long they keep purchasing assets they can increase that. Their $700b of M2 creation was offset by about little less in debt paydown from the private sector, who is still delevering. This is why I believe QE round 2 will come, they will face something like 0.5% core inflation, 1-1.5% inflation expectations and negative yoy M2, it will be hard for them to sit idle
 
Quote from Daal:

I dont understand what Soros is saying with regards to Germany. He seems to agree with the budget deficit cuts

"What would be the right policy for Germany to pursue? It cannot be expected to underwrite other countries' deficits indefinitely. So some tightening of fiscal policies is inevitable. "

But he also wants fiscal spending
"By cutting its budget deficit and resisting a rise in wages to compensate for the decline in the purchasing power of the euro Germany is actually making it more difficult for the other countries to regain competitiveness.

Generally speaking, this is the time to put idle resources to work by investing in education and infrastructure. For instance, Europe needs a better gas pipeline system and the connection between Spain and France is one of the bottlenecks. The European Investment Bank ought to be able to find other investment opportunities as well."

But it also appears that he is targeting the criticism to the ECB
"Before any actual policy steps can be discussed, two theoretical points need to be made. One is that a tightening of fiscal policy can be offset by a loosening of monetary policy. For instance, the ECB could buy treasury bills directly from countries that cannot borrow from the market at reasonable rates, significantly reducing their financing costs below the punitive rate charged by the German inspired European Financial Stabilization Fund. But that is not possible without a change of heart by Germany."

This could be a similar formula to be followed in the US and UK. Tighten fiscal policy gradually but loosen monetary and keep it loose for longer. The central banks can be trusted to withdraw the stimulus in a timely fashion more than congress or parliaments
More...
didnt they already do that,greece owes germany and france a boatload and can't make the payments now,soros might be partial to greece
 
Shit

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