Economic forecast (converting bla-bla into $$$)

LIQUIDITY TO THE WRONG PEOPLE and Text of statement from Fed -


Anecdotal evidence:
A) ( Deutsche Bank had to take over FIVE of the larger properties in MANHATTAN in default, ONE example: guy bought the GM building with $50MM down and a price of $500MM and the rest was financed. Later showing using presumed higher rental income the guy refinances to bumbling Germans eager to spend time in the big Apple on a $1.5BB price tag … guy defaults and has walked out with a couple of hundred millions and bank left holding the proverbial POS on a $1.5BB property which is now worth?).
B) European factories are abandoning some shift work ( meaning there will be less money to trickle through those economies).
C)US households double whammied as real estate price declines combined with falling stock portfolios lower net worth/leverage and curtails spending of luxury and large ticket items....

OIL
Recent concerted efforts of CBs would suggest that these moves have a bleeping short duration impact but cannot do much until oil is reigned in and gold plunges.People are taking refuge in hard assets (vs. financials imploders) in the hope of keeping inflation at bay. It is my understanding that the Oil exporters will continue tight supply for the following reasons:
A) No big oil discovery to flood market so even if they could…
B) Increase in demand of 2% soaks up all new comers
C) The US dollar is such a fiat currency at this point, oil is really at $70 bux when you think of it but it impacts people who will make McDonalds, Wal-Mart and Costco their idea of holiday destinations.
D) The leverage of oil traders is inordinate to the liquidity they bring to a market. They are probably the biggest benefactors of the 28day liquidity issued by CBs.

FINANCIALS
On the financial front, the biggest issue remains risk management. When your predecessor’s follies are liquidated by a risk committee comprised of liquidators, auditors and accountants, you are not in a position to find your next rising star and create value for your firm. I never heard of Admiral Nelson telling his men to batten down the hatches at the battle of Trafalgar. If anything he probably said open up all the cannon ports and send out fresh troops to conquer the enemy ( scarcity of money to be loaned to PRODUCTIVE vs. SPECULATIVE assets).
GARBAGEMEN AS ARBITRATORS
A) Margin calls always liquidate the above water positions first
B) Blue Chips get liquidated second
C) Illiquid positions will be discounted by a factor of 3x when markets implode ( so you better bet on companies with 300% increase in earnings or stay on sidelines)

WHAT TO DO?
Takes these rallies to clean up your messier stocks and keep your powder dry, reminding yourself that in a falling market your worst enemy is the risk manager at the other’s guy firm. It is HIS leverage that will affect your overall performance.

In conclusion, three weeks ago I thought I was seeing value in financials and I was looking forward to but the data is proving otherwise. While I can still hope to meet one, I haven’t still met a banker that ever impressed me. My prescription remains: Put in place conditions to allow rates to rise in US so that a foreigner sees 5% on a 10yrT as a GOOD investment. Everything Bernanke has done and doing goes contrary to that and he will fail miserably until he stops trying to hot wire a car at the bottom of a 20ft water filled quarry.Washington needs a balanced budget not rescue pork barrels packages of gargantuan imbecility.

As always thanks to my buddy "Forexman" for supplying me with articles of interest which indeniably help me form an opinion on the matters at hand.

DCW


FED STATEMENT deliverd MArch 11th-2008
- Since the coordinated actions taken in December 2007, the G-10 central banks have continued to work together closely and to consult regularly on liquidity pressures in funding markets. Pressures in some of these markets have recently increased again. We all continue to work together and will take appropriate steps to address those liquidity pressures. To that end, today the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing specific measures. Federal Reserve Actions The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS. The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. As is the case with the current securities lending program, securities will be made available through an auction process. Auctions will be held on a weekly basis, beginning on March 27, 2008. The Federal Reserve will consult with primary dealers on technical design features of the TSLF. (more) - 2 - In addition, the Federal Open Market Committee has authorized increases in its existing temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB, respectively, representing increases of $10 billion and $2 billion. The FOMC extended the term of these swap lines through September 30, 2008. The actions announced today supplement the measures announced by the Federal Reserve on Friday to boost the size of the Term Auction Facility to $100 billion and to undertake a series of term repurchase transactions that will cumulate to $100 billion. Information on Related Actions Being Taken by Other Central Banks Information on the actions that will be taken by other central banks is available at the following websites:
Bank of Canada [www.bank-banque-canada.ca] Bank of England [www.bankofengland.co.uk] European Central Bank [www.ecb.int] Swiss National Bank [www.snb.ch]
Statements by Other Central Banks Bank of Japan [www.boj.or.jp] Sveriges Riksbank [www.riksbank.com]