>Enrique Diaz-Alvarez wrote:
>>Michael, Doug, Kasriel sort of appears to concede Noland's point.
>About credit risk, yes. Not about their immunity to Fed tightening.
>In fact, the kinds of anomalous interest rate spreads Noland talks
>about - expanding risk premiums, for example, of the sort that did in
>LTCM - are more likely to occur when the Fed is in a hostile mode.
>When the Fed is easy, investors get mellow about risk; when it's
>tight, they get nervous.
>Doug
I think there are cross purposes here. I never read Enrique as saying that the MMMFs were immune to a Fed tightening; I thought he was saying that the MMMFs were a secondary, uninsured banking system, and that money and credit figures which didn't take account of this sector were therefore flawed. Given E D-A's form as a crashophile, it seems more natural for him to be postulating a theory under which exactly what you say happens -- that the Fed tightens, spreads widen, the MMMFs go south and America has what amounts to a banking crisis? Although this is my own pet theory, so I may be projecting.
"This deal is not about expense synergies, it's not about layoffs. We do no expect material layoffs as a result of this deal"
--Bill Harrison, Chase Manhattan at the press conference on the takeover of Flemings.
"They've got strength in asset management, strength in Asia. In Europe we may need to do another deal"
--Ibid.
talk about mixed messages . . . . .
d^2
___________________________________________________________________________
_____
---------------------------------------------------------
This email is confidential to the ordinary user of the
e-mail address to which it was addressed. If you are not
the intended recipient, please notify the sender
immediately on (44) 20 7638 5858 and delete the message
from all locations in your computer. You should not copy
this email or use it for any purpose, or disclose its
contents to any person : to do so may be unlawful.
Email is an informal method of communication and is
subject to possible data corruption, either accidentally
or on purpose. Flemings is unable to exercise control
over the content of information contained in
transmissions made via the Internet. For these reasons
it will normally be inappropriate to rely on information
contained on email without obtaining written confirmation
of it.
----------------------------------------------------------
___________________________________________________________________________ _____
---------------------------------------------------------
This email is confidential to the ordinary user of the
e-mail address to which it was addressed. If you are not
the intended recipient, please notify the sender
immediately on (44) 20 7638 5858 and delete the message
from all locations in your computer. You should not copy
this email or use it for any purpose, or disclose its
contents to any person : to do so may be unlawful.
Email is an informal method of communication and is
subject to possible data corruption, either accidentally
or on purpose. Flemings is unable to exercise control
over the content of information contained in
transmissions made via the Internet. For these reasons
it will normally be inappropriate to rely on information
contained on email without obtaining written confirmation
of it.
----------------------------------------------------------