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The Fed’s Big Con- WSE Pro

The Fed is a running a con. It wants the market to think that it is actually doing something different in response to the liquidity crisis. Click here to download complete report in pdf format (Professional Edition Subscribers).Try the Professional Edition risk free for thirty days. If, within that time you don’t find the information useful, I will give you a full refund. It’s that simple. Click here for more information.

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  1. Jeffrey Smith

    The credit crunch is NOT a liquidity issue as Lee Adler mentions. There is more than enough liquidity in the system and the Fed is likely to pump more in. But the real problem is the paper in these SIVs, CDOs and other weapons of mass destruction are littered with junk. Why should an investor buy paper when it is at best unknown if the paper will default or worse is 100% likely to default. That is the issue, no one wants to buy this paper at any price because it’s likely worthless to begin with.

    This all started with deteriorating underwriting standards which has led to a lot of paper now worthless. That is different from liquidity where there is lots of money sloshing around the capital markets.

  2. Lee Adler


    I’m glad that you think that there’s plenty of liquidity in the system. I do agree that it is a solvency issue as well as a liquidity issue.

    My institutional contacts began telling me back in July and August that they weren’t able to redeem the commercial paper they were attempting to cash out of.

    That’s because the fictitious capital upon which the Ponzi scheme rests does not exist. When the cash flows going in at the bottom of the pyramid stop, the system then becomes illiquid and unstable. So the solvency issue– the fact that there are no real assets there with which to pay the bills, results in a liquidity squeeze.

    Call it whatever you want, the end result is the same.

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