> -----Original Message----- > From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On > Behalf Of John Williams > Sent: Tuesday, September 23, 2008 5:53 PM > To: Killer Bs (David Brin et al) Discussion > Subject: Re: Meltdown > > Dan M <[EMAIL PROTECTED]> > > > > That's > > what the interest rate measures...the willingness of folks to buy GE > notes. > > Gee, really? It couldn't possibly be just a little more complicated than > that? > > > A rational > > market wouldn't change GE's interest rate that quickly > > Again, really? Either you are stating a tautology, or you have no way of > knowing whether the change was reasonable.
OK, let me get this straight. GE is not a financial company, it doesn't hold toxic debt. It is a company that has a lot of physical assets, has held the highest bond rating, has been very profitable, etc. And it is selling _one day_ loans. Now, if you look at http://www.federalreserve.gov/pubs/supplement/2008/08/table1_35.htm you will note that for years the best commercial 1 month paper and the federal funds have been very close. Now, all of a sudden, the fed short term funds dip significantly, and commercial one day paper for companies that do not have any evidence of being tied up with the sub-prime mortgage problem are finding that they have to pay a lot more for overnight money. The article I quoted showed that it wasn't just GE. I picked them because they are among the least likely to be caught up with bad debts. Your answer, as I take it, is the meltdown of big financial corporations and the flight from corporate bonds and the fact that commercial paper from corporations far removed from this meltdown became much harder to sell a week ago, is probably a coincidence....the world is complex you know. Well, chemistry is complex QED. We can barely calculate the simplest bonding with our fastest computers. Does this mean we must ignore data? The question at hand is not whether Paulson's plan is the one we should execute. I think that the government needs to get an equity stake in exchange for its. The question we were debating was whether we saw a panic starting. We've seen panics and know some of their warning signs. My argument is that a gigantic jump in the spread between Fed. Funds and the best commercial paper of companies that are, to the best of anyone's knowledge, totally divorced from the source of the problem is one of these signs. My understanding of your argument is the world is complex and this could be a coincidence. Well, it could. But, you know, the sun rising in the East all these days could also just be a coincidence. :-) Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
