SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Mish's Global Economic Trend Analysis
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: SouthFloridaGuy who wrote (20653)1/7/2005 10:33:26 AM
From: John Vosilla  Read Replies (1) of 116555
 
<I actually think the Fed keeps rising into this. After all, there is still "growth", apparently housing values are still rising so all is well in Dodge.

The economy will show the appearance of strength through the first half of the year. I think Greenspan wants to get enough landscape for the next round of deflation fighting; he may even be willing to accept a steeper recession and raise more than expected just to get the landscape to cut hard and fast.

However, it took something like a 500 basis point cut between 01-03 to get the economy rolling after the stock bubble collapse, now he may have 300 bp if he's lucky to fight a much bigger bubble burst in housing, and that is assuming he takes it to 0%. I just don't think he can do it.

With regard to the yield curve, we already see what is going in the UK and Australia, deflating housing bubbles, lackluster consumer sales (especially in the U.K.). All it takes is an exogenous event to take us down big. Whatever it is, my bet is that it affects oil big time.

Best case scenario is a recession equivalent to the early 90's and a 33% decline in the Dow. Worst case scenario is not worth talking about until we get more color>

I agree. Perhaps the thinking is a flat yield curve by say fall 2005 and a soft recession is better than letting inflation and interest rates on the long end get out of control resulting in a housing collapse and major adjustment in stock market P/E's. That they even reach your best case scenario is much less than 50/50 IMHO as we are too dependent on the actions of others these days for our fate.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News