The credit market defies Fed action – Federal Reserve in deep trouble for the first time – a typical stagflation sliding into deflation
Peter Oberois
Aug. 17, 2007

The Federal Reserve’s half a point reduction in discount rate is received by the credit market poorly. The liquidity crunch will not go away and the long term rates shot up for the fear of inflation. Gold jumped and then started sliding.

Simply put, it seems Federal Reserve has lost control over the economy. The only way to fight a stagflation prone economy sliding into deflation driven depression is to lower the rates to zero percent and then print enormous amount of cash and add the same to the system. Nothing else will stop the meltdown.

The collapse in liquidity is clear from the futures movement as the hedge funds are crashing in their net asset value. The redemptions have skyrocketed. The meltdown has just started. The stock market can crash between now and end of the year.

The credit market defies Fed action – Federal Reserve in deep trouble for the first time – a typical stagflation sliding into deflation
Peter Oberois
The Federal Reserve’s half a point reduction in discount rate is received by the credit market poorly. The liquidity crunch will not go away and the long term rates shot up for the fear of inflation. Gold jumped and then started sliding.
READ MORE>>

Federal Reserve finally realizes the problem – the discount rate cut is just a temporary relief
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The futures market literally collapsed due to lack of liquidity. The Panicked Fed cut discount rate by 05% but that will halt the route for a few days or perhaps a week before the meltdown starts again.
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Venezuela is creating its own oil-field services company to reduce dependence on foreign contractors
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The Producer Price Index report shows the inflation is slowly changing to disinflation – Fed rate cut is near
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The drop in PPI from earlier months is very significant. Normally before a recession hits the major economies, the PPI falls apart from its highs. This is exactly what has happened now.
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Stagnation in German economy is the first sign the stagflation has reached the heart of EU – time to buy dollar index?
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German economic growth is slowing very fast due to a failed boom in construction market. This has severe effects on the Euro Zone economies. German economy is faltering very fast.
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