If The Economy is so Great...

[longknife]

Why are 292 Union Pacific engines sitting idle in the Sonora Desert?

Along with all the people that would have jobs if they were busy hauling goods.

Full story @ Rail Traffic Depression: 292 Union Pacific Engines Are Sitting In The Arizona Desert Doing Nothing

 

[Gary Anderson]

Nice. The economy is not so great. And my argument for some time in my articles is that the Fed wants slow growth because their banks have bet on slow growth and they can't raise interest rates like Volcker did or the entire banking system will crumble.

 

[EdwardBaiamonte]

Nice. The economy is not so great. And my argument for some time in my articles is that the Fed wants slow growth because their banks have bet on slow growth and they can't raise interest rates like Volcker did or the entire banking system will crumble.

1) Yellen is a decent sort who would love some 5% growth

2) banks would love high interest so they can loan at higher rates and make money

3) Fed cant raise rates because in socialist economy there is little optimism about growth so low interest is needed just to keep things crawling along at 1% GDP.

 

[TheOldSchool]

All we need is to dish out a huge number of tariffs and subsidies to protect our industries, and eleiminate free trade deals we have made. Then these trains will be up and running in no time.

 

[EdwardBaiamonte]

All we need is to dish out a huge number of tariffs and subsidies to protect our industries, and eleiminate free trade deals we have made. Then these trains will be up and running in no time.

Exactly what Trump wants to do. He wants to make a better deal, i.e, impose a 40% tax on much of what Americans buy and start a trade war that will keep most of those trains idle in the desert!! A great liberal solution!

 

[TheOldSchool]

All we need is to dish out a huge number of tariffs and subsidies to protect our industries, and eleiminate free trade deals we have made. Then these trains will be up and running in no time.

Exactly what Trump wants to do. He wants to make a better deal, i.e, impose a 40% tax on much of what Americans buy and start a trade war that will keep most of those trains idle in the desert!! A great liberal solution!

Yep. The GOP, the new party of liberal solutions

 

[leftwinger]

We don't have free trade now. I spent some time few countries Asia early 2000's had 30K tax on USA or BMW car. Malasia has all Protron car. Everything in SK is made in SK, hyndai lg etc. no Cat Deere Ford Otis etc. Ask them why? Suddenly English go bad.

 

[Gary Anderson]

Nice. The economy is not so great. And my argument for some time in my articles is that the Fed wants slow growth because their banks have bet on slow growth and they can't raise interest rates like Volcker did or the entire banking system will crumble.

1) Yellen is a decent sort who would love some 5% growth

2) banks would love high interest so they can loan at higher rates and make money

3) Fed cant raise rates because in socialist economy there is little optimism about growth so low interest is needed just to keep things crawling along at 1% GDP.

I like your satire.

 

[Gary Anderson]

What you need to understand, Edward is that banks bet on low rates in the derivatives swaps. They take the low floating side of the bet and the people who borrow from them take the high fixed side of the bet. So, then when the streams cross, all hell breaks loose. Now you know the secret! The chart of LIBOR and Swaps rate crossing is found here:

 

[EdwardBaiamonte]

Nice. The economy is not so great. And my argument for some time in my articles is that the Fed wants slow growth because their banks have bet on slow growth and they can't raise interest rates like Volcker did or the entire banking system will crumble.

1) Yellen is a decent sort who would love some 5% growth

2) banks would love high interest so they can loan at higher rates and make money

3) Fed cant raise rates because in socialist economy there is little optimism about growth so low interest is needed just to keep things crawling along at 1% GDP.

I like your satire.

if you disagree please say why or admit you cant defend yourself

 

[EdwardBaiamonte]

What you need to understand, Edward is that banks bet on low rates in the derivatives swaps. They take the low floating side of the bet and the people who borrow from them take the high fixed side of the bet. So, then when the streams cross, all hell breaks loose. Now you know the secret! The chart of LIBOR and Swaps rate crossing is found here:

the secret?? I love conspiracies!!. Hope Yellen does not found out that banks are engaging in risk management!

 

[Gary Anderson]

Nice. The economy is not so great. And my argument for some time in my articles is that the Fed wants slow growth because their banks have bet on slow growth and they can't raise interest rates like Volcker did or the entire banking system will crumble.

1) Yellen is a decent sort who would love some 5% growth

2) banks would love high interest so they can loan at higher rates and make money

3) Fed cant raise rates because in socialist economy there is little optimism about growth so low interest is needed just to keep things crawling along at 1% GDP.

I like your satire.

if you disagree please say why or admit you cant defend yourself

Calm down Edward. The chart is proof. Look at it. The banks bet on floating LIBOR. The counterparties are forced to bet on fixed swaps rate. Now, the time they crossed, we had the banks freeze up. The Fed knows this and can't afford to allow interest rates to go up because all these bets will turn bad for the banks. The Fed is predisposed for many reasons including this one to keep rates low. In fact, here are some reasons:


So, we need to look at the ways in which the Fed has set things up to predispose it to keep rates low.

1. Grumpy's (Grumpy is John Cochrane) friend says the Fed can't afford to pay the treasury interest if rates are significantly raised. That is almost a hostage situation.

2. The banks have bet on low rates, taking the floating low side of the swaps bet when they issue loans.

3. The Fed pays interest on the excess reserves in order to restrain lending.

4. Long bonds are in massive demand as collateral, the new gold, and there are shortages, even with BRICS nations selling into a deep market.

From this article: The Federal Reserve Knew LIBOR Was Exploding In 2007 And Did Nothing

Even a Fed guy said that the Fed cannot raise rates sometimes and if that happened, the banks would be forced to lend out their excess reserves, rather than just get paid by the Fed: Federal Reserve Mandates Slow Growth. So Fed Must Finance American Infrastructure

So, tell me again, Edward, how the Fed is gung ho on making the economy grow.

 

[EdwardBaiamonte]

The chart is proof.

proof of what??? that there is a vast conspiracy and the banks that are in on it are making a killing??

 

[EdwardBaiamonte]

The Fed is predisposed for many reasons.

oh, well thats a huge concession. now there are many reasons??

 

[EdwardBaiamonte]

From this article: The Federal Reserve Knew LIBOR Was Exploding In 2007 And Did Nothing

at the time no one knew how the situation would unfold!! You have great hindsight!

 

[Gary Anderson]

The Fed is predisposed for many reasons.

oh, well that a huge concession. now there are many reasons??

You are trolling me. If you don't agree with me then I have told you the whole story. If you read it you will learn my side of the story. If you still don't agree fine. Just don't make me repeat what I have said over and over.

 

[EdwardBaiamonte]

So, tell me again, Edward, how the Fed is gung ho on making the economy grow.

I didn't say it was gung ho on making the economy grow. I said it would love to see 5% growth. But, no one thinks the Fed can make that happen. Its job is print money, lender of last resort, avoid deflation/inflation, contain financial turmoil so it does not spread to entire economy. The Fed does not invent new products, capitalists do. A return to capitalism would be necessary to get 5% GDP. Now do you understand?