Here is a link to an interesting article out of Australia which concerns the current thinking on money supply--both in the Au government and in the US. About one year ago, as you may know, the US government quit collecting data to allow it to report money supply in our economy (M3). This is no longer significant information according to the U.S. Federal Reserve. This position however is contrary to the common thinking of economists in days gone by when they followed the money supply information carefully to determine the amount of inflation in the economy which would then dictate an appropriate interest rate.

"Both Margaret Thatcher and the US Federal Reserve under its governor Paul Volker used rigid monetary targets as an excuse to raise rates steeply, enabling them to squeeze double-digit inflation out of their economies almost 10 years ahead of Australia. The favoured monetary target, M3, includes all notes and coin in circulation as well as the deposits held by the public, financial institutions and companies."

Now, however, some would say that in order to avoid a full blown recession, the U.S. Federal Reserve has allowed the money supply in the US to increase significantly. One effect of keeping low interest rates and increasing the money supply was the housing bubble, the deflation of which we are now witnessing. The question is whether we have more inflation built into our economy than is being either dealt with (per interest rate hikes) or admitted to by officials (see decision to stop reporting M3).

"An obituary for [economist Milton] Friedman written by Harvard economic historian Niall Ferguson, following the economist's death last November, noted that money supply is rising quickly everywhere, with growth of about 10 per cent in the US and 13 per cent in England. But, he said, the fact that consumer prices have remained well-behaved does not mean money has become irrelevant.

"On the contrary, it is the key to understanding the world economy today. For there is nothing in Friedman's work that states monetary expansion is always and everywhere a consumer price phenomenon."

He argued that growth in the money supply was driving growth in asset prices around the world as investors tapped the seemingly limitless supply of credit. "

If there is indeed an "invisible" inflation problem in the U.S. economy, it will no doubt come to the surface -- perhaps soon. If that occurs, one can expect an increase in interest rates followed shortly by a slow down in the economy and a longer term easing of inflation.

Here is a link to the full article:
http://www.theaustralian.news.com.au/story/0,20867,21486015-20142,00.html

Mike

The Court of Appeals for the Tenth Circuit recently ruled on the issue of whether the stay created under Bankruptcy Rule 4001(a)(3) suspends the automatic termination of the automatic stay when that termination becomes effective 30 days after the filing of a motion for a relief from stay. See Duran v. AmeriCredit Financial Services, Inc., 2007 U.S. App. LEXIS 7689 (10th Cir. 2007). The case involved a repossession of a truck after an Order was entered lifting the stay, but before 10 days had passed following the date of that Order’s entry.

At issue here was a conflict between Rule 4001(a)(1) and Section 362(e). Specifically:

Bankr. R. 4001(a)(3) says: “An order granting a motion for relief from an automatic stay made in accordance with Rule 4001(a)(1) is stayed until the expiration of 10 days after the entry of the order, unless the court orders otherwise.” and

Subsection 362(e) states that the automatic stay automatically expires thirty days after filing an application for relief from the stay unless one of two prescribed events occurs: the court orders the stay continued pending an evidentiary hearing or the court orders the stay continued following a final hearing.

The Court allowed the repossession of a vehicle before 10 days had run after entry of the Order lifting the Stay, thus adopting the district court’s decision as its own.

The case concerns the lifting of the automatic stay of a Chevrolet truck. In September, 2001, the debtor (“Duran”) bought a 2001 Chevrolet truck, financed by the defendant/appellee AmeriCredit. AmeriCredit had a first lien on the truck. By 2004, Duran defaulted and AmeriCredit instituted a state court action to recover the truck. One day before the hearing on AmeriCredit’s action, Duran filed a Chapter 13 bankruptcy. Under Section 362(a) of the Bankruptcy Code, Duran’s filing created an automatic stay on actions by a creditor to recover on claims against the debtor.

AmeriCredit filed a Motion for Relief from the Stay on November 9, 2004, seeking relief under Section 362(d) of the Bankruptcy Code. On December 8, 2004, the bankruptcy court held a preliminary hearing on AmeriCredit’s motion. On December 9, 2004, the bankruptcy court entered an order granting relief from the stay and AmeriCredit repossessed the truck nine days later on December 18.

On February 22, 2005, Duran filed a Motion for Order of Contempt against AmeriCredit, claiming that AmeriCredit’s repossession of the truck less than ten days after the December 9 order violated the ten day stay of such orders created by Bankruptcy Rule 4001(a)(3).

On March 7, 2005, the bankruptcy court denied the Motion for Order of Contempt on the basis that under Bankruptcy Code Sect. 362(e), the stay expires automatically once 30 days have passed from the date a motion for relief from stay is filed, unless the court orders the automatic stay continued.
Duran argued that the December 9 order automatically continued the automatic stay for ten days under Rule 4001(a)(3), and that AmeriCredit violated this stay by repossessing the truck within the ten day period. AmeriCredit argued and all three courts [the bankruptcy court, district court and the appellate court] that addressed this issue agreed that the Rule 4001(a)(3) stay was not applicable in the circumstance of this case.

The Court held that Rule 4001 cannot suspend the automatic thirty day termination of the automatic stay. The Supreme Court has the power to prescribe rules for cases, but to the extent that a rule adopted by the Supreme Court abridges, enlarges or modifies a substantive right, it is ineffective. In this case, the termination of the automatic stay as it applied to AmeriCredit was a substantive right. This substantive right was the right of a secured creditor to recover its collateral. If Rule 4001(a)(3) was applied as Duran argued, it would be inconsistent with the Congressional thirty day stay duration mandate of Section 362(e), thus exceeding the rule making power of the Supreme Court.

To read the opinion, click on the following link: http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=10th&navby=docket&no=061264

Ray