best buying opportunity in 2+ years coming?, page-31

G'day Rogue Trader,
I am with you here! I could confirm I am a contrarian with you etc but you have covered this pretty well.

A look at Twist and Shout is important as the capital wave that sloshes out of the Bond will drive this rally we are seeing in the wings waiting to emerge. The end of Bonds (pop the current bubble) will see the rise of Equities as the money has to go somewhere in a banking crisis. It will seek yield and capital returns.

Feds 'Twist and Shout'
They seek to flatten the yield curve - very dangerous. This sends a message to the markets that there is a depression or at minimum a recession. They are apparently trying to provide liquidity for housing i.e. match maturities by buying at the long end. Flood market with long dated paper to stimulate long dated loans like mortgages.

This can stimulate the economy if it works, by saving the housing market it can stimulate jobs growth and assist the banks too.

The hidden agenda is to force banks out of their current cushy trade IMO. When they got bailed in QE1 they just bought long dated Treasuries and have played the yield curve. Sat on the money.

Instead of going into the economy where it was needed, the money enabled the Govt to go deeper into debt as Banks bought up this paper. Problem was banks needed to repair their balance sheets so they are. This enables them to write off bad bets - bad loans made during the good years. Move rubbish sitting on their loan books at 'mark to fantasy' into defaulted debt and eject it from the book - too toxic to hold.

But how can you force banks to loan to corporates who are cashed up and not expanding, cutting costs and building nest eggs. Consumers are either out of work or in debt up to their limits or too scared to borrow more. Government is the only borrower setting up debt for consumers on their behalf - isn't that nice :-(

Fed now desperate - this is clear. Debt based monetary system at the end game but people don't realize it yet - well not most but gold bugs do.

Gold stocks and FML holding really well today - some disconnect XGD off about 0.6% and XGD up 1.5% at present.

Cheers,
CW