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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (22645)2/2/2005 1:28:23 PM
From: John Vosilla  Read Replies (2) of 116555
 
BTW a "few" points does seem absurd, but surely 150 bps on the top end would crush housing wouldnt you agree? I do not think that 150 bps is likely either. Far more likely is a housing crash and/or agency widening that causes a flight to safety of treasuries. That whipsaw could even sink FNM.

If yields do get as high as you suggest there will be a depression IMO. Otherwise, and afr more likely we just go the slow torture route like Japan with the FED attempting to fight it all the way.

I think they are trying to tighten as fast as possible in order to have keep the long end from rising. Yes I do think a 150 basis point or more rise would destroy housing so the fed is trying to do the next best thing, a soft landing and minor recession. Perhaps the current model in Great Britain and Australia is to be looked at. Housing weakening pretty substantially yet the overall economy and stock market remain stable with flat yield curve in place. Only problem unique to the US is why will Japan, China and others continue to bail us out and continue to buy all the excess debt if there is no US consumer pent up demand remaining and the trade deficit narrows? They will have there own financing shortfalls to worry about in a global slowdown.
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