Comments on: Hamilton: The Fed Cannot Solve the Credit Crisis http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html Sun, 22 Nov 2009 11:45:14 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5216 Anonymous Sun, 16 Mar 2008 00:33:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5216 So when would the "authorities . . . ideally like" I wonder? After January 20, 2009 so they can try to blame this debacle on the Democrats? So when would the “authorities . . . ideally like” I wonder? After January 20, 2009 so they can try to blame this debacle on the Democrats?

]]> By: Anon http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5114 Anon Thu, 13 Mar 2008 21:52:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5114 Hi Yves,<br/><br/>Re: The Game of Chicken<br/><br/>Did you see this:<br/><br/>“In reality the Fed is plastering over the cracks until the US Government eventually spends taxpayer’s money stabilising the markets,” said Jim Reid at Deutsche Bank in a note. “Perhaps the markets are trying to force the authorities’ hand sooner than they would ideally like.” http://ftalphaville.ft.com/blog/2008/03/13/11568/cds-report-is-carlyle-the-tip-of-an-iceberg/ Hi Yves,

Re: The Game of Chicken

Did you see this:

“In reality the Fed is plastering over the cracks until the US Government eventually spends taxpayer’s money stabilising the markets,” said Jim Reid at Deutsche Bank in a note. “Perhaps the markets are trying to force the authorities’ hand sooner than they would ideally like.” http://ftalphaville.ft.com/blog/2008/03/13/11568/cds-report-is-carlyle-the-tip-of-an-iceberg/

]]> By: s http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5056 s Wed, 12 Mar 2008 18:53:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5056 Structural sustainable growth rate of US economy is a HUGE issue. Structural sustainable growth rate of US economy is a HUGE issue.

]]> By: eh http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5053 eh Wed, 12 Mar 2008 17:37:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5053 <i>I'm not sure our friendly creditors will cut us suficient slack.</i><br/><br/>Without high growth to help support the dollar, this is a real question mark. Remember the talk earlier that the Fed cuts would (pardoxically) stimulate growth and cause the dollar to rise? I’m not sure our friendly creditors will cut us suficient slack.

Without high growth to help support the dollar, this is a real question mark. Remember the talk earlier that the Fed cuts would (pardoxically) stimulate growth and cause the dollar to rise?

]]> By: Yves Smith http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5052 Yves Smith Wed, 12 Mar 2008 16:38:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5052 jh,<br/><br/>This is not a two year problem. The last housing recession (started ~ 1988) lasted 15 quarters, and that was with a Resolution Trust Corporation to force market clearing. <br/><br/>With failure on the individual mortgage level, no easy way to either resturcure or liquidate mortgages due to the way they have been securitized (and the lack of workout skills at lenders; they outsource to credit counsellors), this will take at least as long to resolve.<br/><br/>And having the Fed socialize losses reduces the incentive to have market clearing. We are instead going the Japan route of having zombie financial institutions and prolonged low growth. But Japan at least had a very high savings rate, so they could manage this internally. I'm not sure our friendly creditors will cut us suficient slack. jh,

This is not a two year problem. The last housing recession (started ~ 1988) lasted 15 quarters, and that was with a Resolution Trust Corporation to force market clearing.

With failure on the individual mortgage level, no easy way to either resturcure or liquidate mortgages due to the way they have been securitized (and the lack of workout skills at lenders; they outsource to credit counsellors), this will take at least as long to resolve.

And having the Fed socialize losses reduces the incentive to have market clearing. We are instead going the Japan route of having zombie financial institutions and prolonged low growth. But Japan at least had a very high savings rate, so they could manage this internally. I’m not sure our friendly creditors will cut us suficient slack.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5048 Anonymous Wed, 12 Mar 2008 15:51:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5048 Does anyone think that wages would rise as much as increased inflation on goods and services? Wouldn't additional inflation simply put consumers further in the hole, thus aggravating the housing problem? Does anyone think that wages would rise as much as increased inflation on goods and services? Wouldn’t additional inflation simply put consumers further in the hole, thus aggravating the housing problem?

]]> By: Anonymous http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5047 Anonymous Wed, 12 Mar 2008 15:26:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5047 As mentioned in earlier comments, very very well said. The implication for home prices is for much lower prices, it has too be. As mentioned in earlier comments, very very well said. The implication for home prices is for much lower prices, it has too be.

]]> By: s http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5044 s Wed, 12 Mar 2008 13:41:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5044 JH<br/>TAFY is cash to the banks and in theory that money would be lent out or shoved into higher yielding assets to earn NIM. = to inflationary. JH
TAFY is cash to the banks and in theory that money would be lent out or shoved into higher yielding assets to earn NIM. = to inflationary.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5043 Anonymous Wed, 12 Mar 2008 13:37:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5043 JH<br/><br/>I am pretty sure the FED outsourced its money printing operations to the Asian Central Banks. JH

I am pretty sure the FED outsourced its money printing operations to the Asian Central Banks.

]]> By: S http://www.nakedcapitalism.com/2008/03/hamilton-fed-cannot-solve-credit-crisis.html#comment-5042 S Wed, 12 Mar 2008 13:15:00 +0000 http://www.nakedcapitalism.com/2008/03/hamilton-the-fed-cannot-solve-the-credit-crisis/#comment-5042 JH parsiong and semantics. The fed cutting rates post sept 01 may not have printed monrey nbut it fdqcilited an explosion of near money and hence the credit tsunami. Host of dicsusions out there on fractuional reserves so leave it to thm. As an aside TIPS spreads negative JH parsiong and semantics. The fed cutting rates post sept 01 may not have printed monrey nbut it fdqcilited an explosion of near money and hence the credit tsunami. Host of dicsusions out there on fractuional reserves so leave it to thm. As an aside TIPS spreads negative

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