U.S. stock futures tumble on Citi deal, GDP data

Market Watch ^ | February 27, 2009 | Steve Goldstein

[perfect_rovian_storm]

It seems to me that the reason for the chart looking like that is because the printed money isn’t circulating (yet).

That’s why the economy needs to pick up to get that money circulating before we can see a huge uptick in inflation.

Turning the faucet off is good in theory, but here we are with a strong possibility that other countries are going to balk at buying the massive debt we’re piling on top of other massive debt, leaving us with the printing press as our only option.

[Wyatt's Torch]

Typically inflation is caused by too loose lending i.e. rates too low for too long resulting in too much money chasing too few goods. If rates “race up” people will buy more treasuries which will draw liquidity out of the market.

[Wyatt's Torch]

The "printing press" still requires a way to get money into the system. Liquidity is inject through the purchase of bonds. Here's a great site that explains the process.

Jude Wanniski's Supply Side University: The Basics of Money Creation

[org.whodat]

and just yesterday it seems

"NEW YORK (Reuters) -- Citigroup Inc, which has received $45 billion of capital from the government, is going through with plans to buy a $50 million corporate jet, a person familiar with the matter said.

Such a well run organization.

[Broker]

Let's talk about bond market inflation. Remember 1980?

All long-term bond yields are determined by supply and demand in the capital markets. Bond yields are a measure of this balance. Our dear leader needs to borrow mightily which means new bonds will enter into the competative areana adding to supply. Our dear leader will do this again and again and again and again............

[St. Louis Conservative]

I keep waiting for that shoe to drop, however bond yields remain very low because of the high demand for security for Americans and foreigners (I’m assuming this is case). So far, demand for bonds because of the weak equity markets has kept up with the increased supply and kept interest rates - and borrowing costs for the government - quite low.

[Broker]

The US Government has now is THE dominant force in the bond market essentially cornering out all other debt/bond issues even with the 30yr at 3.71%!!! All outstanding bond values held by JAPs, Chinese, Swiss, etc. are premium priced. Their books look sweet.

A perfect storm is on the horizon.

[Broker]

A storm or run on U$ debt would dwarf everything seen or imagined to date.

[St. Louis Conservative]

Elaborate a bit on that. I’m interested, but I’m not a bond expert - I have a basic understanding.

[Broker]

A portrait of where we have been and our destiny? The U$ govt. has an insatiable appetite for capital which can only derived from fiscal or monetary sources that is printing or borrowing. Massive borrowing is funded in the capital markets in the form of US bond which are bought for their perceived safety and income. Each issue is priced with a fixed interest rate and date of maturity.. The price is determined at auction in the free market where subscribers/buyers bid a rate. The rate rises until buyers step in and commit.

The Obama team has clearly indicated they will need more money than carter has pills for a long long long time. This will require new issue after new issue again and again.

Threats: #1. After market sales/run. #2. Perpetual dilution from new issuance.

[April Lexington]

At the time the Dow was up a meager 48 points around noon, when the woman reporter said; The Dow is headed for positive territory today, strong evidence that President Obama’s stimulus plan is working! Particularly his recent boost to the financial market!” (Can't you just vision the Liberal info babe on CNN or MSNBC talking here?)

These "young" people will just have to learn that Obama is destroying the USA. Let them suffer unemployment and their own depression. Don't feel sorry for them. Let it happen. The smart assed youth of the 1920s became VERY conservative in time. Let it happen. Let it happen...

[April Lexington]

My guesstimate at the timeline: We stay in a trading range of roughly 7,000 to 7,500 through April earnings season. Earnings will be far worse than expected. That will kick us into a trading range of between 6,250 and 6,750 through July. The July earnings season will also be abysmal and worse than expected and that will ignite the bottom of around 5,500 to 5,750. Things won’t get better until around Q2 of 2010... Hope I am wrong.

I was thinking the bottom would be 6500. Sadly, I think you are right and I am wrong...

[April Lexington]

First the USA gobbles up all of the oil, now the USA gobbles up all of the available global credit to support its consumption based economy. Wow! I wonder how the anti-globalists will feel about this!!!

[Broker]

The anti-globalists (anarchists) are as confused. Who has any use for those useful idiots?

Rush Limbaugh's definition of fairness; "treat everyone equally as bad." Welcome to the future.