This is potentially serious, guys

[solarbird]

I don't understand the ramifications of yesterday's Fed's actions well enough here to post a top-level comment about it yet, but if they're diverting holdings to long-term bonds now that implies have to be thinking short-term bond rates are going to spike up past current long-term rates, and that'd be on the order of 8x what you see now in short-term bond interest? So, um, yeah, that's kinda not good. Be aware.

Comments

[rfunk.livejournal.com]

Or it implies that they're trying to lower long-term interest rates in order to encourage people to borrow and spend (thus stimulating the economy) rather than save.

[silussa dark elf (from livejournal.com)]

That's what the Fed says it's trying to do. Although doesn't that mean when interest rates climb (as they inevitably will), that the government is going to be primarily in short term debt and the costs of the debt will REALLY spike?


--Silussa the LJ-less

[solarbird]

No LJ anymore? When did that happen? Man I'm easily distracted.

here, I replied to rfunk.

[silussa dark elf (from livejournal.com)]

About two weeks ago. I got blasted on IM for my opinion in LJ in a rather unpleasant way (by a friend of sufficient years that I attended his wedding), and decided it wasn't worth continuing.

I don't mind disagreements. I do mind name calling and being told I said things I didn't. And then having the door slammed so I can't even respond.

If we can't have rationality between people that KNOW each other, I'm not terribly hopeful for the next few years.

side note: did you know non-LJ users have to sit through a 30 second commercial to make a post? Sheesh.

[solarbird]

um, in a word, lol. Oh, sure, that's what they're saying, but, well, this is one of those times where I go, "wow, I hope they don't actually believe that." There's been no de-leveraging to mention, less-mortgage personal credit figures I've seen are actually up, and most importantly, there's not a wetslap's worth of savings interest to be had out there, so this'll have no impact on anyone at all except maybe - maybe - in 401(k)s, and that's not what you call spending money to start, so if that's where they're going - well, I don't know how this is gonna get them there.

[silussa dark elf (from livejournal.com)]

I think they believe it because they've run out of anything else to try. In other words, sheer desperation.

The FED has used its bag of tricks. The Congress can't even agree what not passing a budgetary extension will do. People are assuming things are not going to get better, which pretty much guarantees they won't.

It is going to be a very unpleasant next few years.

[partywhipple.livejournal.com]

I am not sure what that means... sigh...