天下纵横
随笔而已。不必当真。
正文
Today FED had cut rate another 0.5%. It flood the market with liquidity like no tomorrow.
Investors are not cheering. Well it probably surprise the FED with investors reactions.
FED has been using liquidity to blow up bubbles, after bubbles. At cerntain point, all the bubbles will collapse. I am afriad the day of blow up is getting closer every day. This time is no different, only if lending practice can be relaxed (to create more subprime), the housing just cant be supported.
I'd say, let the housing run its course. What is wrong with low housing price? Lower housing price provide a strong foundation for the economy recovery, for people would have low mortgage payment in the coming decade and more disposable income for savings and consumption. Of course, the adjustment process will be painful, then what is real pain if we have inflation in double digits and stagflation in the overall economy?
FED's action only tells us that they are not a "of the people, by the people and for the people" organization. They can not be trusted. They will ruin the future of America by sacraficing many for a few.
Investors (some) are seeing this point. People run away from market for lack of confidence on FED. I do not know if they will return or not, probably will, for there is no better place to hide other than the stock market which lose real values. But many are dumb enough only to calculate their return up percentage of stock gain. (They just do not have the concept of bases of real value).
People do not know for each economic cycle under certain monetary policy, there are certain class of assets will grow better than the rest, this is true in inflation environment, this is also true in deflation environment, and especially true in stable monetary environment.
People are using historic data to point out: Stock always rise. Yeah, right, they rise in absolute numbers. But are their real value also rise? Dumb fed, smart investor but more dumb investors.
Investors are not cheering. Well it probably surprise the FED with investors reactions.
FED has been using liquidity to blow up bubbles, after bubbles. At cerntain point, all the bubbles will collapse. I am afriad the day of blow up is getting closer every day. This time is no different, only if lending practice can be relaxed (to create more subprime), the housing just cant be supported.
I'd say, let the housing run its course. What is wrong with low housing price? Lower housing price provide a strong foundation for the economy recovery, for people would have low mortgage payment in the coming decade and more disposable income for savings and consumption. Of course, the adjustment process will be painful, then what is real pain if we have inflation in double digits and stagflation in the overall economy?
FED's action only tells us that they are not a "of the people, by the people and for the people" organization. They can not be trusted. They will ruin the future of America by sacraficing many for a few.
Investors (some) are seeing this point. People run away from market for lack of confidence on FED. I do not know if they will return or not, probably will, for there is no better place to hide other than the stock market which lose real values. But many are dumb enough only to calculate their return up percentage of stock gain. (They just do not have the concept of bases of real value).
People do not know for each economic cycle under certain monetary policy, there are certain class of assets will grow better than the rest, this is true in inflation environment, this is also true in deflation environment, and especially true in stable monetary environment.
People are using historic data to point out: Stock always rise. Yeah, right, they rise in absolute numbers. But are their real value also rise? Dumb fed, smart investor but more dumb investors.
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