<the availability of myriad credit spigots >
This is the 64k question. Of course I don't think American will withdraw from vendor financing voluntarily or in any rational manner. It will have to happen institutionally. The Fed?: No way, they are irresponsible beyond belief, with everyone overfocused on their "measured" little 25 bps nonsense. The Asians? Maybe, if they tire of vendor financing (inflationary printing of money out of thin air to buy USD debt) $53 oil, and $1.50 copper, etc, etc. More likely than tiring, they will choke on it, and I think we are getting very close to that point (my Train Wreck theory). When they do go bust from lack of, or sky high input goods, and crushing business losses from manufacturing Wal Mart crap in the red, you will see large amounts of USD loans brought home to shore up collapsing Chinese and Asian banks, and enterprises. It will be a giant reflux, and I now think that's the most likely end game to the credit bubble. I really think it's close at hand. Other possibilities might be FNM type crises, but actually that may be a sideshow. It could be any number of accidents, that we discuss here regularly. Mish to his credit does as good a job as anybody at tracking accidents and natural cooling, and I thank him for his hard work. It needs to watched, as a financial accident may be the event that leads to a sudden cold deflationary bust. Still and I think clearly, the evidence is mounting that it will be the hot inflationary bust strain, leading to a giant Asain reflux. Whatever, the bottom line to collapsing the credit bubble, will be an institutional removal (in some manner) of easy credit heroin (and/or cheap money losing goods) from the American consumer. Right now it's just a piss poor business decision for the Asians to be engaging in this , game is over, it's checkmate. |
