11:04:21 ME : think about what we talked about last week
11:04:26 ME : this whole thing is scripted
11:04:34 ME : the letter to the fed
11:04:40 ME : the wsj thing
11:04:43 ME : and now todays thing
11:21:18 *** FRIEND 2 acknowledged the chat request.
11:22:41 FRIEND 2 : I just retyrned from a meeting. Which item are you refering to today. I got lost with so many developments.
11:22:56 ME : the house republicans coming out against QE2
11:28:04 FRIEND 2 : Is it a unified opposition or just the tea party?
11:30:30 ME : led by the republican house leadership
11:30:35 ME : mcconnell and cantor
11:31:10 FRIEND 2 : I viewed it as an internal struggle ofr the direction of the party. Just like the democrats are struggling with direction after the election defeat
11:31:46 ME : you're not nearly cynical enough about the rollout of 'memes' in media
11:34:14 FRIEND 2 : I am interested to see what new initiatives are undertaken before and after the new congress sits. If nothing changes, the economy is toast.
11:34:31 FRIEND 2 : Tax hikes, expensive health care etc
11:34:35 ME : what changes do you want to see so that the economy is n ot toast?
11:34:47 ME : so deeper deficits are better?
11:35:26 ME : sounds a lot like choosing how to get executed - you can get shot or you can get hung...
11:36:41 FRIEND 2 : delay any tax hikes for 2 years, repeal the health care legislation so businesses are not afraid to hire, address the public sector pension issue by cutting entitlements (make them work more than 20 yrs before drawing a pension) etc
11:37:41 ME : but then you;d have to acknowledge things haven;t really gotten better
11:37:50 ME : despite all the claims
11:37:58 ME : which would spook markets
11:38:04 ME : creating more pessimism
11:38:11 FRIEND 2 : I think the Feda
11:38:13 ME : and more negative demand shocks
11:38:59 FRIEND 2 : The fed action was because fiscal policy was gridlocked. If congress enacted pro-growth policies, the Fed action would not be needed.
11:39:48 FRIEND 2 : America
11:40:00 ME : is or used to be?
11:40:45 ME : the degree of centralization of commerce is a threat to the type of innovation you desire
11:40:56 ME : maybe roll back all the concentrations of various industries
11:40:58 ME : then
11:41:02 ME : banking
11:41:04 ME : media
11:41:06 ME : etc
11:41:17 ME : military/industrial
11:41:25 ME : northrup grumman
11:41:27 ME : et al
11:41:34 FRIEND 2 : most job creation is from small businesses. They are ones who can't get the credit now to expand
11:41:46 ME : despite banks being awash in liquidity
11:41:54 ME : which of coure indicts TARP
11:42:09 ME : key semantic change
11:42:25 ME : betraying the political nature of bernanke and the fed
11:42:36 ME : inserting the key phrase "credit worthy"
11:42:42 ME : well after the fact of TARP
11:42:45 ME : pre TARP
11:42:58 ME : "get the flow of credit running to borrowers again"
11:43:03 ME : 1yr later
11:43:08 FRIEND 2 : they are buying treasurys, which is why the fed is trying to make them seek other ways to invest/loan the money. there is ample liquidity, but the banks just got crushed on lending
11:43:15 ME : "get credit flowing to credit worthy borrowers"
11:43:44 ME : if you ever thought banks would loan any new monies to private sector america
11:43:56 ME : what a laugh
11:44:38 FRIEND 2 : it is too profitable playing the roll down and carry game in risk free assets. they need to lend, not buy govt guaranteed treasury debt
11:45:00 ME : so you agree TARP was a failur given its stated goals then
11:45:25 FRIEND 2 : take the profit out of the carry game, and they will follow their noses to other profitable areas.
11:45:41 ME : so you want a transaction tax?
11:45:46 ME : higher cap gains?
11:45:49 ME : what?
11:46:12 ME : how bout not give them no-strings-attached money to begin with????
11:48:10 FRIEND 2 : the profit motive is a powerful motivator.
11:48:18 ME : cruel joke it all is
11:48:25 ME : the rhetoric
11:48:32 ME : vs the reality
12:02:47 ME : http://www.zerohedge.com/article/republicans-boehner-mcconnell-kyl-and-cantor-send-letter-bernanke-blasting-qe2
12:07:05 ME : what do you think??
12:07:23 ME : rates wise
12:07:29 FRIEND 2 : I had not seen this. Are they just trying to harness the tea party voters?
12:07:38 ME : remember last week
12:07:44 ME : think about the larger game
12:07:50 ME : you know, g209
12:07:53 ME : g209!
12:07:57 ME : we're on our way
12:08:12 ME : we just need north korea
12:08:19 ME : g20
12:08:25 ME : china downgrading u.s.
12:08:27 FRIEND 2 : I think the fed loses more credibility by reacting to political pressure than they could possibly gain. They must be seen to be independant
12:08:34 ME : putting $1T of Treasuries on offer
12:08:44 ME : what a laugh
12:08:53 ME : that the fed is not a highly politicized entity
12:08:57 ME : given the last 15 years
12:09:00 ME : seriosul
12:09:04 ME : seriously
12:09:08 ME : come on
12:09:34 ME : asset prices are not under their purview on the way up
12:09:39 ME : but they are on the way down??
12:09:40 ME : huh??
12:09:51 FRIEND 2 : but if they reverse course now, in response to politicians who have spent the past 10 yrs pumping up the deficit only now find religion?
12:09:59 ME : the most massive expansion in credit EVER (inflationary!)
12:10:02 ME : MONEYT CREATION
12:10:09 ME : was either
12:10:10 ME : 1)
12:10:12 ME : flat out missed
12:10:14 ME : or
12:10:15 ME : 2)
12:10:16 ME : ignored
12:10:23 ME : because of political consideration
12:10:27 ME : either way
12:10:34 ME : complete indictment
12:11:00 ME : how can you talk in dulcet tones about fed credibility now??
12:12:04 ME : all that there is left is the ability of the sell side to credibly say 'fed credibility' with people not erupting in laughter or populist fury
12:12:17 ME : that's all there is left
12:12:41 ME : you know, the people cashing the bernanke put checks
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