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November 24, 2008



Fletch in the house!


agree rpb.. though if they smart, treasury should be lighting up the 5yr 10yr & 30yr bids in the biggest way they can. keep the hangers on (banks etc) hangin on to whatever remains of short liquidity as long as poss


This is simply amazing; in a bad way. We may actually see the Crowding Out Effect in practice. I do not think that anyone would have ever imagined we would be at the threshold to prove its existence. Wow. This may become really ugly.

It seems that banks are starting to ask new, scary questions with regards to credit lines. I believe they are no longer asking the question "If these firms had the proper access to credit would they return to profitability?" I believe some are now starting to contemplate "In this type of a toxic, red tide-esque financing environment, is this type of business financing obsolete?" As in, in the current economic environment can all types of firms that rely so heavily on short term financing survive? Couple this with the beginning of a vicious Crowding Out Effect spiral and we are twisting into a nightmare of immense proportions. I think its time to closey watch the Treasury auctions.

This sounds absolutely ludicrous. I hope I am way off. But this possible inflection point is very troubling.

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