All is Well

The managing director and founding Partner of the infamous Carlyle Group had this to say about the markets in January (full memo here):

"As you all know (I hope), the fabulous profits that we have been able to generate for our limited partners are not solely a function of our investment genius, but have resulted in large part from a great market and the availability of enormous amounts of cheap debt. This cheap debt has been available for almost all maturities, most industries, infrastructure, real estate, and at all levels of the capital structure. Frankly, there is so much liquidity in the world financial system, that lenders (even “our” lenders) are making very risky credit decisions...

I EXPECT THAT THIS EXCESS LIQUIDITY, LEADING TO HUGE AMOUNTS OF RELATIVELY CHEAP FINANCING, WILL CONTINUE FOR AT LEAST THE NEXT 12-24 MONTHS. FRANKLY, I SEE NO CATALYST THAT WILL LEAD TO A QUICK, LARGE OR DRAMATIC CHANGE IN THE GLOBAL LIQUIDITY. HOWEVER, I HOPE THAT YOUHAVE NOTICED THE ROUGHLY 40-50 BASIS POINT MOVE UPWARD IN THE YIELD CURVE OVER THE LAST 45 DAYS. THIS IS A BIG MOVE IN A SHORT PERIOD OF TIME AND IS PROBABLY A RESULT OF MARKET RECOGNITION THAT THE FED WILL NOT BE REDUCING RATES ANYTIME SOON.

I know that this liquidity environment cannot go on forever. I know that the longer it lasts the more money our investors (and we) will make. I know that the longer it lasts, the greater the pressures will be on all of us to take advantage of this liquidity. And I know that the longer it lasts, the worse it will be when it ends. And of course when it ends the buying opportunity will be a once in a lifetime chance. But, I do not know when it will end. "

The Dow may be at new nominal highs, but what good is that to Minnesotans who can't even pay their utility bills?

In what may be another troubling sign for the state's economy, record numbers of Minnesotans are delinquent in paying their natural gas bills.

You have to be pretty financially strapped to not be paying your utility bills in Minnesota. Good thing there's no inflation (if you don't count food or energy)...

Hey, a bond blog.

Finally, from Howard Blackstein (he likes ALL CAPS too):

WE TAKE YOU TO THE COURT OF LOUIS XVI AND MARIE ANTIONETTE- THEY DO NOT UNDERSTAND WHY THE COMMONERS ARE FOMENTING REVOLT! AFTER ALL ,THEIR ECONOMISTS ASSURE THEM THAT CONSUMER SPENDING HAS BEEN UP FOR THE LAST 10 YEARS(OF COURSE, 99% OF PURCHASING POWER WAS IN THE HANDS OF THE ARISTOCRACY!!!!). DOES THIS SOUND FAMILIAR?- THE RICH GET RICHER,AND THE REST OF THE COUNTRY GETS FORCLOSED!!! I AM SURE THAT UP TO THE MOMENT OF THEIR BEHEADINGS, BOTH MARIE AND LOUIS WERE AT A LOSS AS TO WHY THE PEOPLE WERE 'MAD AS HELL'.

Yep.