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(an email exchange)

>   On Tue, Sep 16, 2008 at 10:24 AM, Tom wrote:
>   Hi Coach,
>   While financial markets are in a meltdown not unlike the post 9/11
>   experience,

yes, major deleveraging going on

>   the good news is that central banks around the world are providing
>   coordinated liquidity injections along with other positive actions that may
>   create a new basis for global financial rescues.

yes, but all that does is set the fed funds rate and term fed funds rate. it’s about price, not quantity

>   The creation of the League of Nations was an example of how the world
>   responded to WWI.
>   Tom
>   P.S. But it is still not time to buy stock.


watch for fiscal policy to do the heavy lifting to support GDP and employment.


6 Responses

  1. Quick Question:

    When the media talks about the Fed adding $50bn in overnight repos this morning “on top of” the $70bn they added yesterday they are showing their lack of understanding right? Yesterday the Fed added via overnight repo, so those rolled off this morning. So more accurately they added $20bn less than they did yesterday?

    Do I have my thinking correct on this?

  2. yes, and none of it functionally matters except as tools to set the funds rate. if the fed doesn’t add ‘needed’ funds the banks in need are then ‘overdrawn’ at the fed which is booked as a loan from the fed at the discount rate, which is higher than the ff target rate.

    the fed ‘adds’ reserves to keep the ff rate at it’s target rather than 50-75 bp over their target if the banks instead use the window.

    the quantity of reserves is the same, only the price is different

  3. Do you see another fiscal package happening before the end of the year, or do you think they’ll wait until the new administration?

  4. Jim the fed didn’t drop rates, and they have been saying for a long time now that the “slowdown” was gonna be severe enough to pop all these bubbles and inflation stuff right? I want to be able to take my BRE-X, Enron and AIG stock certificates to the discount window for some money.

    Jim I hope they give me some more free money and a free house too. I don’t want to work for it. I want to move next to warren on the nice virgin island and drink maragaritas and eat hamburgers in paradise for nothing. It’s great down in the US virgin islands, right now no property taxes, almost no federal income taxes, then I can sit on the internet all day and try to convince other humans to be mules to find cures for diseases and do the heavy lifting while me and my bud Mr. Masters laugh at them from our beach chairs.

    When I was in new orleans and they gave me some free money I had a great time at the strip clubs buying lots of liquor and hookers – why work? That is for suckers and dummies.

    Lookie here – AIG is blowing up – W. Buffet and W. Ross talking about reinsurance business and Financial WMD’s blowing sky high – but those island boys passing new legislation to bring the burning embers of the blown up insurance business to thier island lifestyle:


    Like a phoenix from the ashes! Greed is good and you can never have enough money or power (or drugs or hookers)

    I hope the next administration closes these tax loopholes that warren and mr. masters have enjoyed and tax them suckers good in the US Virgin islands, american somoa and guam as well, let them flee to another country like Jim Rogers if they want to beat the system and have to learn a new language and everything – but then they might have to go back to school and so some real WORK – uggg! Then I hope the gubbment finds ways to keep jim rogers and everyone else that tries to flee to keep paying taxes, and thier children and childrens children, my ultimate dream is to one day have every human being on the planet working and paying taxes except me and jimmy buffet of course.

  5. Jim,

    If unemployment threatens 7% there may be an emergency fiscal package before year end.


    the EDC program has been a failure. very few moved here, and most have left. seems the lower tax rate didn’t make up for the other ‘inconveniences.’

    Also, the fed doesn’t hand out any ‘free money’- that’s what congress does.

  6. 7% unemployment already here for the blackfolk!


    As my bro richard pryor said in that link I sent u, in da black community, we already got high unemployment and I am ready for my free check! What makes me upset about the numbers you post here Warren, they don’t show this divide between races. What makes me even more upset is that white people got the same stimulus package that my fellow black brothers got yet the above chart clearly shows white people don’t need it as much as da black people. I have seen many commercials of that guy from that movie “dumb and dumber” jeff daniels pimping for the state of michigan economic development authority, who probably need stimulus checks worse than my friends in palm beach.

    Why are they using shotguns when it is clearly a sniper rifle that is needed? No more free money for white people!!! No more free money for citizens of palm beach! Dat is what I say.

    As to the EDC – I don’t understand, you are proposing we make huge structural changes so that “more money” will incentivize folks to do things differently than they do now, yet it seems the EDC experiment failure is PROOF that “more money” may not be the way to motivate the donkeys – as I have said a few times already, I would rather have a hippy on my team who is not so “money greedy” than a society where we teach our children to love money and then use that as a carrot to make them do what we want.

    For instance, take these lawyers trying to get software companies interested in the virgin islands:


    In the above link they make reference to only 10% fed tax rate. However they didn’t watch that movie “THE MATRIX” where physical location is becoming less and less important in this world of virtual reality.

    Google has just patented using “wave power” on floating barges in international waters for their data centers – what gubbment will they be a slave too – they are bigger than any gubbment, bigger than the human rights of any gubbment.


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