For Employment to be fixed...

Discussion in 'Too Hot for Swamp Gas' started by gatordowneast, Jul 21, 2013.

  1. gatordowneast
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    gatordowneast Well-Known Member

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  2. madgator
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    madgator Well-Known Member

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  3. tegator80
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    tegator80 Well-Known Member

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    In order to get things really revved up, we would have to allow businesses to build icky, smelly, polluty, plants and pay wages that reflect the balance between the demand for jobs and the danger of the work (read stick a sock in the union's mouth).

    Not a very likely scenario in the near future. The Hostess scenario first, then Detroit and THEN maybe we will figure out that we can't eat and save the endangered species at the same time.
  4. 108
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    108 Premium Member

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    <iframe width="560" height="315" src="//www.youtube.com/embed/LOojbp8ptWI" frameborder="0" allowfullscreen></iframe>
  5. ThePlayer
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    ThePlayer VIP Member

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    Reform the tax code
    Lower corporate taxes
    Reduce the burdens to small business
  6. GatorRade
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    GatorRade Well-Known Member

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    According the super economy model at Moody's analytics:

    Even if you are all-powerful, it's hard to fix the economy
  7. orangeblueorangeblue
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    orangeblueorangeblue Well-Known Member

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    That article really had nothing to do with the fed, I'm not sure what that little side note was about.

    The markets are booming because there's no other place to easily and reliably make money with money. Period. $85B isn't jack squat to the markets.
  8. surfn1080
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    surfn1080 Well-Known Member

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    That's becuase you don't understand the markets. The Feds even admit they are doing it to push rates low and boost Wall Street.

    http://www.washingtonsblog.com/2011...ond-purchases-is-to-drive-up-wall-street.html

    Now it's not the sole reason but when the market loses a lot in just 2 days after the Feds suggest they MIGHT slow down QE by the end of the year, you know the hold it has over the market.
  9. orangeblueorangeblue
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    orangeblueorangeblue Well-Known Member

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    Actually, I do understand the markets and what you say here is exactly what I just said.

    The Feds are pushing the rates low and that is driving the markets. That can be done without bond sales. They are two different mechanisms entirely.

    In other words, bond sales & buybacks are not required to move the interest rates. Prime is driving the markets, not monetary injection.
  10. orangeblueorangeblue
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    orangeblueorangeblue Well-Known Member

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    The function of the Fed - at this point - remains to keep people from saving. This isn't surprising, they've been doing the same thing for decades.
  11. gator95
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    gator95 Member

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    If the 85Billion means jack squat, why the hell are we doing it? Answer that and you will have your answer.
  12. orangeblueorangeblue
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    orangeblueorangeblue Well-Known Member

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    Because once interest is essentially 0, the Fed is out of other options.

    $85B represents .01% of the market. There's only so much they can do.
  13. Matthanuf06
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    Matthanuf06 New Member

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    There are different points in the curve that they are manipulating.
  14. orangeblueorangeblue
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    orangeblueorangeblue Well-Known Member

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    Huh?
  15. orangeblueorangeblue
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    orangeblueorangeblue Well-Known Member

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    When Bernanke admitted that tapering was looming, Wall Street reacted - far less because of $85B less in treasuries a month, far more because that means interest rates will be increasing.

    You can see this definitively with the types of bonds the Fed started buying after the announcement.
  16. Matthanuf06
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    Matthanuf06 New Member

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    They are manipulating multiple points along the curve. They purchase plan was aimed at the long end. A major motivation for that is o stimulate home buying. Obviously corporate bonds are longer in nature also, which that program stimulates as well.

    The Fed can set the short term rate. That gives companies, and especially banks access to day to day credit.
  17. orangeblueorangeblue
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    orangeblueorangeblue Well-Known Member

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    Yeah, ok, that's what I just said in the last post in terms of strategy. Wasn't sure what you were saying. It's still pretty much all that's in their toolbox at this point.
  18. Matthanuf06
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    Matthanuf06 New Member

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    You mentioned the purchase plan isn't required to push down rates. Short term rates you are right, but how would you propose them to reduce longer term rates and flatten the curve? Not many tools in that toolbox
  19. Matthanuf06
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    Matthanuf06 New Member

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    Point is it is much more difficult for the Fed to manipulate the long end. Clearly possible given the last handful of years, but the recent rise in rates show that there are many other factors in play at the longer key rates.
  20. orangeblueorangeblue
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    orangeblueorangeblue Well-Known Member

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    Yeah, but that's always been the case. Right now there are basically no 2Y or 3Y securities moving.

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