Futures and Oil prices

[TPS]

What I mean by 'out of jack", is that they had over half a trillion in "cash securities" on their own balance sheet that have been swapped with the investment banks for worthless paper. If they want to keep doing that, they have to print for their own account, although I am sure they have been doing so behind the scenes without telling anyone since they said it was their job to stop a disaster.

 

You are correct, they can't make lenders lend or borrowers spend, so what is happening is that instead of lending, banks are holding their new found cash so they don't go under. This forces others that need a loan or want to refinance on to the sidelines or the foreclosure pit, thus devaluating mortgage securities even more and forcing more insolvency. If the Fed continues to delever the entire system, you might be left with lower prices on housing and other secured assets, but the reality is that everything else over time is going to digest that constant inflow of cash and you will see it in higher real prices of oil, thus leading to shipping, food etc. We don't make enough crap to warrant a long term weak dollar, and we can't count on Asia and the Arabs to keep bailing us out because they may pull the plug on us. I've always compared it to kissing your boss' rear even though you don't like the guy. After all those years of kissing his but, if it looks like he might be on the outs, you help kick him out the door. China smells blood. Since when is a communist country worried about starving their own people anyway?

 

In the perfect storm that has been created, there is a good chance you will see 10% interest rates, $5.00 gas, and higher unemployment all as people keep losing houses and other goodies. If you are a little old lady sitting on a pile of cash, go buy yourself a boat, a Hummer and a summer home, because almost nobody else can afford to right now.

Which is why the other side of the policy coin is being used too. The government, with one hand, is pushing its housing rescue through and handing out checks with the other hand. If the Fed and Govt can stave off the collapse of asset values, and the economy recovers, they can always start siphoning off the liquidity when things improve.

 

The late economist Hyman Minsky wrote an article titled "Can 'IT' Happen Again?" By 'IT' he meant another depression. He believed IT could be prevented through the policy options available to the FED and Government. The current conditions are such that I believe IT would happen now, but policy makers are using everything at their disposal to try to prevent IT. That doesn't mean IT won't....

 

As for China and the $, I think most people here already know my view (similar to yours). I think I wrote elsewhere in this thread about my views on the $-oil linkage.

[GG]

What I mean by 'out of jack", is that they had over half a trillion in "cash securities" on their own balance sheet that have been swapped with the investment banks for worthless paper. If they want to keep doing that, they have to print for their own account, although I am sure they have been doing so behind the scenes without telling anyone since they said it was their job to stop a disaster.

 

The Fed is also exercising prudence by fixing things ahead of the curve. The treasuries they held on the asset side were fine & dandy in a normal market. But in a failed mortgage market, you run a much higher risk of Fannie & Freddie defaults and the possibility that the Fed guarantees will be called. Then the Fed will be stuck with crap houses on its balance sheet instead of illiquid, but performing mortage securitizations. I'll take that trade any day.

[Dwight Drane]

The Fed is also exercising prudence by fixing things ahead of the curve. The treasuries they held on the asset side were fine & dandy in a normal market. But in a failed mortgage market, you run a much higher risk of Fannie & Freddie defaults and the possibility that the Fed guarantees will be called. Then the Fed will be stuck with crap houses on its balance sheet instead of illiquid, but performing mortage securitizations. I'll take that trade any day.

 

Right...but you have just verified East Brady's view. Keep the banks on the in afloat as you deflate assets held by the middle and lower class of both residents and financial+banking firms until they are forced to "spit them all up" and just as the peak of the asset crisis flips, you hyperinflate so everyone that was on the sidelines and is newly on the sidelines can no longer afford to be owners. The classic smash and grab so to speak.

 

Round 2 is knocking on the door. Feds are going to force more things to be marked to market now that the cronies are "secure". They have done a good job preventing a rise in gold by doubling the margin requirements to hold it, yet when we last talked about the situation on the week of March 17, gold is flat even with the roadblocks thrown in, oil is up 30%, and all the financial names we talked about are flat or down (Lehman, Citi, Wamu....Investment,mix,retail). And that is after the hundreds of billions in rescue funding.

 

I'm assuming the government will nationalize the Airline Industry, but what about the Auto Industry, or continued farm aid? You don't think that has something to do with the behavior of the $ and oil? I know you take the company line, but I think we are on the carnival ride for good now, and what started as a feel good rush is going to leave us all puking on each other.

[Dwight Drane]

Which is why the other side of the policy coin is being used too. The government, with one hand, is pushing its housing rescue through and handing out checks with the other hand. If the Fed and Govt can stave off the collapse of asset values, and the economy recovers, they can always start siphoning off the liquidity when things improve.

 

The late economist Hyman Minsky wrote an article titled "Can 'IT' Happen Again?" By 'IT' he meant another depression. He believed IT could be prevented through the policy options available to the FED and Government. The current conditions are such that I believe IT would happen now, but policy makers are using everything at their disposal to try to prevent IT. That doesn't mean IT won't....

 

As for China and the $, I think most people here already know my view (similar to yours). I think I wrote elsewhere in this thread about my views on the $-oil linkage.

 

I agree with your original points here which is why I chimed in. Only the original earthquake has been dealt with and it is too early to decide if that was a foreshock, or we are about to feel aftershocks. The Fed is doing it's job by handing out lifevests on the Titanic, but it looks like the 1st class cabin gets them first. There is a chance the whole ship still goes down, and the mainstream media has been acting like all is well. We're taking on water from a few different points now, so I don't know how much the Fed's actions will help in the long run.

[colin]

things will be bad but we'll pull through.

 

tps, the fed can cause inflation, in fact they are inflation. they print the money, that's inflation.

 

end of story.

[TPS]

things will be bad but we'll pull through.

 

tps, the fed can cause inflation, in fact they are inflation. they print the money, that's inflation.

 

end of story.

No. The Fed can allow or accomodate inflation, they don't cause it--not unless they are handing money to the average joe consumer or business. I don't know anyone who can go to a federal reserve bank and get a loan or a cash handout. Inflation is a general rise in prices. First question: how are prices set? Businesses add a mark up (some %) over their avereage total costs. The mark up is governed by the degree of competition in an industry. Costs are mainly made up of wages (including salaries and benefits), raw materials, and energy (especially for manufacturers). To keep it simple (so AD can understand it), as costs increase, prices increase. And, given the increased costs, there's an increased demand for working capital, and therefore the need to borrow, by firms. Borrowing, or loans, is how money is created. For the most part, the banking system makes the loans, and the Fed governs the cost of loans by setting a target Fed Funds interest rate (FFR), which is essentially the banks' borrowing cost. The Prime interest rate is a mark up over the FFR. In a fast growing economy costs eventually begin to increase due to increased demand for resources, low unemployment giving workers more bargaining power, some industries hitting capacity before others, etc. Rising costs means increased borrowing by firms, and loans are how money is created. In addition, workers (consumers) with their higher incomes or even more people working are taking out loans. At this point, the FED has to decide whether or not to let the growth continue or not. If it lets it go, it could cause an inflationary spiral. Higher wages (due to labor's better bargaining position) leads to higher costs, which lead to higher prices. Or, it can decide to put the brakes on by raising its FFR target. The Fed almost always chooses this course of action. End of story.

[DC Tom]

No. The Fed can allow or accomodate inflation, they don't cause it--not unless they are handing money to the average joe consumer or business. I don't know anyone who can go to a federal reserve bank and get a loan or a cash handout. Inflation is a general rise in prices. First question: how are prices set? Businesses add a mark up (some %) over their avereage total costs. The mark up is governed by the degree of competition in an industry. Costs are mainly made up of wages (including salaries and benefits), raw materials, and energy (especially for manufacturers). To keep it simple (so AD can understand it), as costs increase, prices increase. And, given the increased costs, there's an increased demand for working capital, and therefore the need to borrow, by firms. Borrowing, or loans, is how money is created. For the most part, the banking system makes the loans, and the Fed governs the cost of loans by setting a target Fed Funds interest rate (FFR), which is essentially the banks' borrowing cost. The Prime interest rate is a mark up over the FFR. In a fast growing economy costs eventually begin to increase due to increased demand for resources, low unemployment giving workers more bargaining power, some industries hitting capacity before others, etc. Rising costs means increased borrowing by firms, and loans are how money is created. In addition, workers (consumers) with their higher incomes or even more people working are taking out loans. At this point, the FED has to decide whether or not to let the growth continue or not. If it lets it go, it could cause an inflationary spiral. Higher wages (due to labor's better bargaining position) leads to higher costs, which lead to higher prices. Or, it can decide to put the brakes on by raising its FFR target. The Fed almost always chooses this course of action. End of story.

 

I predict you're going to be told that you don't know what you're talking about, because he read otherwise on rense.com. I also predict that someone's going to point out that inflation is currently a problem despite the Fed Funds rate dropping, hence you're wrong.

 

So my question is: are you going to keep arguing cogently and knowledgably with people who know nothing about the subject, or are you going to realize the complete futility of arguing and give up early? Because if you're going to keep going, I want a few minutes to make some popcorn...

[colin]

No. The Fed can allow or accomodate inflation, they don't cause it--not unless they are handing money to the average joe consumer or business. I don't know anyone who can go to a federal reserve bank and get a loan or a cash handout. Inflation is a general rise in prices. First question: how are prices set? Businesses add a mark up (some %) over their avereage total costs. The mark up is governed by the degree of competition in an industry. Costs are mainly made up of wages (including salaries and benefits), raw materials, and energy (especially for manufacturers). To keep it simple (so AD can understand it), as costs increase, prices increase. And, given the increased costs, there's an increased demand for working capital, and therefore the need to borrow, by firms. Borrowing, or loans, is how money is created. For the most part, the banking system makes the loans, and the Fed governs the cost of loans by setting a target Fed Funds interest rate (FFR), which is essentially the banks' borrowing cost. The Prime interest rate is a mark up over the FFR. In a fast growing economy costs eventually begin to increase due to increased demand for resources, low unemployment giving workers more bargaining power, some industries hitting capacity before others, etc. Rising costs means increased borrowing by firms, and loans are how money is created. In addition, workers (consumers) with their higher incomes or even more people working are taking out loans. At this point, the FED has to decide whether or not to let the growth continue or not. If it lets it go, it could cause an inflationary spiral. Higher wages (due to labor's better bargaining position) leads to higher costs, which lead to higher prices. Or, it can decide to put the brakes on by raising its FFR target. The Fed almost always chooses this course of action. End of story.

 

 

no.

 

inflation is growth in the money supply. the fed has control of the money supply. the ultimate level of the money supply is influenced heavily by credit expansion, but the ability of the banks to expand credit is dominated by the fed's influence.

 

and prices ARE NOT cost plus some margin, they are what the market will bare. the do not just go up because costs go up, they go up because the market will clear at higher prices.

 

if your labor costs went up and you decided to charg for your posts, no one would pay a nickle. supply and demand determines prices, with the exception of interest rates (in the usa at least) as they are set by the fed.

 

 

when the fed inflates the money supply, you see inflation in prices, not because of costs changing, but because the value of the dollar (its economic scarcity) is reduced due to an inflated supply of dollars.

 

dc tom, before you get your popcorn and lube and butt plug to wank to TPS' intro to eco posts, you might want to look up how the fed managed themselves under volker, and milton friedman's helicopter argument on inflation.

 

TPS' text book isn't the only one

[Alaska Darin]

No. The Fed can allow or accomodate inflation, they don't cause it--not unless they are handing money to the average joe consumer or business. I don't know anyone who can go to a federal reserve bank and get a loan or a cash handout. Inflation is a general rise in prices. First question: how are prices set? Businesses add a mark up (some %) over their avereage total costs. The mark up is governed by the degree of competition in an industry. Costs are mainly made up of wages (including salaries and benefits), raw materials, and energy (especially for manufacturers). To keep it simple (so AD can understand it), as costs increase, prices increase. And, given the increased costs, there's an increased demand for working capital, and therefore the need to borrow, by firms. Borrowing, or loans, is how money is created. For the most part, the banking system makes the loans, and the Fed governs the cost of loans by setting a target Fed Funds interest rate (FFR), which is essentially the banks' borrowing cost. The Prime interest rate is a mark up over the FFR. In a fast growing economy costs eventually begin to increase due to increased demand for resources, low unemployment giving workers more bargaining power, some industries hitting capacity before others, etc. Rising costs means increased borrowing by firms, and loans are how money is created. In addition, workers (consumers) with their higher incomes or even more people working are taking out loans. At this point, the FED has to decide whether or not to let the growth continue or not. If it lets it go, it could cause an inflationary spiral. Higher wages (due to labor's better bargaining position) leads to higher costs, which lead to higher prices. Or, it can decide to put the brakes on by raising its FFR target. The Fed almost always chooses this course of action. End of story.

Ooh, got me there.

[DC Tom]

Ooh, got me there.

 

And that was the simple explanation. Imagine the complex one.

[Alaska Darin]

And that was the simple explanation. Imagine the complex one.

I'd be happier with the correct one.

 

He's just so much damn smarter than me. I mean imagine being able to reduce something as complex as the U.S. economy down to: we have smaller, shorter recessions mostly because we have way more government involvement. As if that's not just one piece of the equation. Nope, not to TPS.

 

But I need it simplified.

[colin]

I'd be happier with the correct one.

 

He's just so much damn smarter than me. I mean imagine being able to reduce something as complex as the U.S. economy down to: we have smaller, shorter recessions mostly because we have way more government involvement. As if that's not just one piece of the equation. Nope, not to TPS.

 

But I need it simplified.

 

you like mine tho right!?

 

:>?

[GG]

Right...but you have just verified East Brady's view. Keep the banks on the in afloat as you deflate assets held by the middle and lower class of both residents and financial+banking firms until they are forced to "spit them all up" and just as the peak of the asset crisis flips, you hyperinflate so everyone that was on the sidelines and is newly on the sidelines can no longer afford to be owners. The classic smash and grab so to speak.

 

Round 2 is knocking on the door. Feds are going to force more things to be marked to market now that the cronies are "secure". They have done a good job preventing a rise in gold by doubling the margin requirements to hold it, yet when we last talked about the situation on the week of March 17, gold is flat even with the roadblocks thrown in, oil is up 30%, and all the financial names we talked about are flat or down (Lehman, Citi, Wamu....Investment,mix,retail). And that is after the hundreds of billions in rescue funding.

 

I'm assuming the government will nationalize the Airline Industry, but what about the Auto Industry, or continued farm aid? You don't think that has something to do with the behavior of the $ and oil? I know you take the company line, but I think we are on the carnival ride for good now, and what started as a feel good rush is going to leave us all puking on each other.

 

Don't understand what you're getting at. The Fed didn't print any new money. They just shifted assets & liabilities. Granted the assets are more risky now, but it's a fair trade off to take on illiquid performing assets to prevent taking on illiquid crap assets later on and avoid a financial system disaster in the process. In a sense the Fed dug deep into its regulatory reservoir to bail out BSC's creditors (not BSC) and finally dismantled the legacy of Glass Steagall.

 

Don't see how Fed's actions are deflating the assets held by the masses. If anything Bear's failure would have caused a more severe downturn in housing & mortgage markets, with potentially a catastrophic impact on Freddie & Fannie.

[TPS]

inflation is growth in the money supply. the fed has control of the money supply. the ultimate level of the money supply is influenced heavily by credit expansion, but the ability of the banks to expand credit is dominated by the fed's influence.

Your first sentence is wrong, the second has pretty much been discredited, but the rest are correct. The FED can control short term interest rates, which influences credit expansion and the money supply.

 

and prices ARE NOT cost plus some margin, they are what the market will bare. the do not just go up because costs go up, they go up because the market will clear at higher prices. if your labor costs went up and you decided to charg for your posts, no one would pay a nickle. supply and demand determines prices, with the exception of interest rates (in the usa at least) as they are set by the fed.

When I say the "mark up is determined by the degree of competition in an industry" that is the influence of S&D conditions. When markets become more competitive, it becomes more difficult to "pass along costs" into higher prices, so, yes, firms will have to pursue other strategies like outsourcing production (longer term) or reduce their margins (short term). Reading the paper this morning DOW chemical is going to raise prices by 20% due to rising energy costs. Is that S&D, or are they passing increased costs along in to higher prices?

 

when the fed inflates the money supply, you see inflation in prices, not because of costs changing, but because the value of the dollar (its economic scarcity) is reduced due to an inflated supply of dollars.

You have causality backwards, obviously because you believe the "Uncle Miltie" line.

 

dc tom, before you get your popcorn and lube and butt plug to wank to TPS' intro to eco posts, you might want to look up how the fed managed themselves under volker, and milton friedman's helicopter argument on inflation.

Friedman's "helicopter argument" makes for a good story to persuade people like you, but the Fed does not own helicopters. The Fed influences banks' reserves and money is created when banks make loans. Banks and the FED can't directly influence people to borrow however. Inflation occurs from either too much demand (relative to supply) or a supply-side cost shock. If there was some way that people's money incomes were doubled over night, then the helicopter story could work; but money doesn't grow on trees nor is it dropped from helicopters. Friedman and Monetarism was discredited in the 1980s. I've saved quotes from him in the WSJ and Business Week. Each one goes something like this: Money supply growth is greater than potential real growth, so inflation will be higher next year. Each time he was wrong.

 

Inflation was "tamed" in the 1980s because Volker raised interest rates to unprecendented levels causing the most severe recession since the GD with unempolyment reaching 10%. Labor lost its bargaining power (Reagan helped too by breaking the air controllers union). Combine that with increased global competition and low oil prices, and you get lower costs and less ability to mark up prices. Increased global competition has forced firms to constantly try to keep their costs down, and if they can't do it in the US, then they outsource. This is why Greenspan's fed could let the unemployment rate go below 5% in the 1990s--labor's ability to bargain for higher wages has declined.

 

We are currently in a very interesting situation. Global demand is pushing up commodity prices, with oil prices rising from "other factors" as well as demand, while, at the same time, the US is (almost) in a recession (hence the low interest rates). The FED can't control those kinds of cost influences.

 

Conclusion: prices are rising because of REAL factors, not the FED dropping money from helicopters. Corn (and all grain) prices are rising because of ethanol production; global commodities being pushed up by demand from Chine, India and other emerging economies; and oil prices from demand, speculation, and the depreciation of the $.

 

DC, pass the popcorn...

[TPS]

I'd be happier with the correct one.

 

He's just so much damn smarter than me. I mean imagine being able to reduce something as complex as the U.S. economy down to: we have smaller, shorter recessions mostly because we have way more government involvement. As if that's not just one piece of the equation. Nope, not to TPS.

 

But I need it simplified.

Gee, I always wondered what it would feel like to be DC Tom...

 

AD, of course you can't reduce an explanation to one general answer, but there is typically one major influence. In this case, activist fiscal (increased government) and monetary policies have reduced the amplitude of Business Cycles. I certainly didn't come up with this; it's accepted by the majority of "the profession." The major change since the GD has been the size of Govt relative to gdp, and fiscal policies to prevent recessions from becoming depressions.

 

DC, pass the salt.

[Alaska Darin]

Gee, I always wondered what it would feel like to be DC Tom...

 

AD, of course you can't reduce an explanation to one general answer, but there is typically one major influence.

Horsehockey.

In this case, activist fiscal (increased government) and monetary policies have reduced the amplitude of Business Cycles. I certainly didn't come up with this; it's accepted by the majority of "the profession." The major change since the GD has been the size of Govt relative to gdp, and fiscal policies to prevent recessions from becoming depressions.

At one time in human history, the majority of one profession accepted that the earth was flat. Currently, the majority of "scientists" are pushing Global Warming.

 

Try and figure out where I'm going.

DC, pass the salt.

I'm sure if you asked Tom, he'd still think you're an idiot. In other words, you're overvalueing the single complement he's ever given you. I sense a pattern...

[Sketch Soland]

Good thread.

 

Keep it comin', imo.

 

Meanwhile, I will firebomb the Fed and wipe it off this plane of existence.

[TPS]

Horsehockey.

 

At one time in human history, the majority of one profession accepted that the earth was flat. Currently, the majority of "scientists" are pushing Global Warming.

 

Try and figure out where I'm going.

 

I'm sure if you asked Tom, he'd still think you're an idiot. In other words, you're overvalueing the single complement he's ever given you. I sense a pattern...

Speaking of patterns, yours is always to insult without adding anything to the discussion. You used to try a little harder.

 

Complimented? I was referring to your comment about me.

And thanks for the reminder I'm not part of the club. I'm so disappointed...boo hoo...

[colin]

Your first sentence is wrong, the second has pretty much been discredited, but the rest are correct. The FED can control short term interest rates, which influences credit expansion and the money supply.

 

 

When I say the "mark up is determined by the degree of competition in an industry" that is the influence of S&D conditions. When markets become more competitive, it becomes more difficult to "pass along costs" into higher prices, so, yes, firms will have to pursue other strategies like outsourcing production (longer term) or reduce their margins (short term). Reading the paper this morning DOW chemical is going to raise prices by 20% due to rising energy costs. Is that S&D, or are they passing increased costs along in to higher prices?

 

 

You have causality backwards, obviously because you believe the "Uncle Miltie" line.

 

 

Friedman's "helicopter argument" makes for a good story to persuade people like you, but the Fed does not own helicopters. The Fed influences banks' reserves and money is created when banks make loans. Banks and the FED can't directly influence people to borrow however. Inflation occurs from either too much demand (relative to supply) or a supply-side cost shock. If there was some way that people's money incomes were doubled over night, then the helicopter story could work; but money doesn't grow on trees nor is it dropped from helicopters. Friedman and Monetarism was discredited in the 1980s. I've saved quotes from him in the WSJ and Business Week. Each one goes something like this: Money supply growth is greater than potential real growth, so inflation will be higher next year. Each time he was wrong.

 

Inflation was "tamed" in the 1980s because Volker raised interest rates to unprecendented levels causing the most severe recession since the GD with unempolyment reaching 10%. Labor lost its bargaining power (Reagan helped too by breaking the air controllers union). Combine that with increased global competition and low oil prices, and you get lower costs and less ability to mark up prices. Increased global competition has forced firms to constantly try to keep their costs down, and if they can't do it in the US, then they outsource. This is why Greenspan's fed could let the unemployment rate go below 5% in the 1990s--labor's ability to bargain for higher wages has declined.

 

We are currently in a very interesting situation. Global demand is pushing up commodity prices, with oil prices rising from "other factors" as well as demand, while, at the same time, the US is (almost) in a recession (hence the low interest rates). The FED can't control those kinds of cost influences.

 

Conclusion: prices are rising because of REAL factors, not the FED dropping money from helicopters. Corn (and all grain) prices are rising because of ethanol production; global commodities being pushed up by demand from Chine, India and other emerging economies; and oil prices from demand, speculation, and the depreciation of the $.

 

DC, pass the popcorn...

 

the bolded part is junk.

 

although the fed might not be able to just hand out cash, but they can very much expand and contract the money supply via the banks. as this is done, the liquidity will leak out in the market. the thing is it doesn't spread evenly (which is why the cpi/ppi is a waste of time). when they inflated the money supply in the late 90s, the new cash went into tech (start ups, expansion, massive capacity upgrades, tech equities) in the last expansion of the money supply it got dumped into consumer lending (houses, credit cards, cdo's and cmo's, house builders, and lbo's a plenty). this is worse for the man in the street that bills form the sky, because they will be the last in and last out.

 

the real junk part of that comment is the value judgement you pretend to make on supply and demand.

 

you are essentialy saying that inflation is a problem with supply or demand (or perhaps both), something that you are ostensibly supporting the government or fed "fixing".

 

as AD pointed out, you are saying the market is wrong and the government will be able to correct the too high demand, or "supply side shock". if this were the case the government could just fix north korea and cuba, but they can't. they can't because the market creates wealth, nothing else.

 

this is a joke. the market sets prices (except for the price/supply of the dollar/interest rates which the fed just sets by fiat). its that simple. if you have more demand, you get a higher price. less supply, higher price. the thing is the market will respond with more supply, more alternatives or subsitites, and as a poster pointed out about demand for oil, if people can't pay the price they will just do without.

 

so to conclude: inflation is a decrease in the value of the currency, government fiat controlling supply and interest rates (the price of money) even if that supply increase is filtered through private institutions is the real cause of this. the market setting prices in a way that you don't agree with isn't inflation.

[DC Tom]

I'd be happier with the correct one.

 

He's just so much damn smarter than me. I mean imagine being able to reduce something as complex as the U.S. economy down to: we have smaller, shorter recessions mostly because we have way more government involvement. As if that's not just one piece of the equation. Nope, not to TPS.

 

But I need it simplified.

 

No, that was pretty much correct. The Fed doesn't print money, but they do make it easier or harder to borrow money, hence affecting working capital and thus consumption. Thus, lower interest rates makes it easier to borrow money to buy stuff, hence making stuff more in demand, hence raising the price...and voila, inflationary pressure.

 

It's obviously far more complex than that (for example: the credit market meltdown tightened the money supply in that it made it much harder to borrow). But TPS is generally accurate here.