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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Silver Super Bull who wrote (4468)1/6/2004 10:53:11 AM
From: russwinter  Read Replies (5) of 110194
 
<I would tend to think not very sustainable.>

There's a profit squeeze coming. Bernanke would tell you that labor costs are "stable" and are 75% of input costs. What he doesn't tell you is that other labor costs besides wages are inflating. The other 25% of input he non-wage cost he dismisses is no laughing matter either, especially given $34 oil/$7 nat gas. That's disruptive. Also the real reasons wages are "stable" is that a steady stream of these wage paying jobs are being sent overseas to boost the "productivity miracle" nonsense he and Easy Al spout. Of course this further guts the American income base, just creates weaker demand (which I agree with the deflationists is coming), and makes those debts harder to service.

I suppose the debate here between the deflationists and inflationists may be leading us to the same destination. The only difference is the interest rate question. I think there will be a foreign induced spike and some version of a USD defense, followed by a huge bust. Others like tippet and misheldo don't even think a spike (except perhaps in long dates)will be necessary to create the bust? That's possible I suppose. Maybe it's all academic, if the end result is the same?
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