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Leverage is quite capable of creating the illusion of liquidity.
"Will the B-52s arrivwe in time?"
I have been predicting for a few years that the bursting of the housing bubble,
in combination with the unwinding of the epic credit binge,
was going to lead to extreme carnage on the downside, as consumers and financial institutions would both be impaired.
That is where we are today.
Bill Fleckenstein, MSN Money 22/12 2008
Now the Fed has done what it's done and will promise to do more. At last week's meeting of the its Open Market Committee, the Fed essentially said it might as well hold future meetings at Strategic Air Command headquarters outside Omaha, Neb.,
so as to be closer to the B-52s it will need to deliver money to the country posthaste.
The usual way to deliver money is by Helicopters
RE: Perhaps a job for Biggles?
This is one of the most extraordinary periods in U.S. financial history.
We had crossed over from "too big to fail" to "too big to bail out."
Bill Fleckenstein, 22/9 2008
As I have said so many times, the housing bubble was the economy. When it burst, it left behind bad debts at the consumer and financial-institution levels and, as everyone knows by now, it broke the housing ATM.
That sounds like a simple explanation, but it's a bit more complicated. What needs to be grasped is not just the headline news -- i.e., that financial companies are in trouble -- but the underlying problem the country faces, namely the brutal recession.
That sound you hear is the popping of a financial bubble in housing, the economy and the market.
And you can trace it all to Alan Greenspan's Federal Reserve.
Bill Fleckenstein, 30/6 2008
There is a budding realization that the housing bubble's collapse will be more difficult than the masses and Wall Street had believed.
It's now obvious that this is a problem not only for the consumer but for the financial system itself, which is in dire straits as it tries to deleverage, thereby compounding the problem.
Leverage is quite capable of creating the illusion of liquidity.
Thus what many had seen as excess liquidity was simply massive leverage, which is now being unwound.
(The surfeit of savings, which is what "liquidity" alludes to, never existed.)
Fed's $200 billion loan scheme won't work
The giveaway strategy -- creating a huge pool of cash to loan to securities dealers, with risky mortgage-backed debt as collateral -- is little but stalling for time.
Bill Fleckenstein, 17/3 2008
The bailout was nothing more than an agreement by the ratings agencies to pretend that the monolines were still worthy of AAA ratings.
How could MBIA - which recently had to pay 14% to borrow money ever possibly be considered AAA?
Fleck CNBC 3/3 2008