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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: russwinter who wrote (2082)3/15/2004 1:47:36 PM
From: Jim Willie CB  Read Replies (1) of 116555
 
Russ, you make a great deal of sense
but you seem to miss on the realities of rising production costs and household costs, and their effects in both the immediate term and the near term

sure, prices are rising everywhere
but outsourcing is a byproduct of Fed reflation
but incomes are not
but pricing power is totally nonexistent
but Asian goods accelerate in imports
but CB's are subsidizing our TBonds

you have no factors whatsoever to dismiss the deflationary outcomes in progress, nor justification to label it as Orwellian logic
IT IS PURE & SIMPLE INTERVENTIONIST CONTROLLED OUTCOMES
this bullshit will barrel us down squarely into the Liquidity Trap

as long as CB's intervene, we become just like Japan
and will follow the JAPAN PATH
with failed real estate sector, failed banking sector
when CB's back out, we follow the ARGENTINA PATH
then and only then, will you prevail with higher interest rates
CB's and Chindia are screwing with your entire otherwise correct logical flow

next up is a stall in residential real estate
not from rising mortgage rates, but from poor incomes
this will add to the stress assisting deflation

you talk about industry shutdowns
I agree, shortages will lead to defaults and interrupted supply
but how can you consistently arrive at the opposite conclusion to what is unfolding?
take your argument to exaggerated levels
suppose half of all industries shut down
what will happen to worker income, spending, pricing power?
it will decline sharply

will that interrupt the flow of Asian finished goods?
no

so no money to run the economy, while imports continue to flow in

that does not point to higher interest rates

you seem to be calling the 9th inning on the radio
but we are still playing the middle innings
/ jim
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