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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Crimson Ghost who wrote (22927)2/5/2005 1:03:19 AM
From: mishedlo  Read Replies (1) of 116555
 
Greenie could have ended this real estate bubble at a more reasonable stage if he had moved to raise rates more aggressively early on.

But what was once a bubble now seems on the verge of transforming into a super bubble IMHO.

No way can this end without a huge amount of pain for all concerned.

I agree and furthermore I agree that I was wrong and Greenspan should have hiked aggressively sooner. Then again, I never thought rates should have gotten to 1% either. Those last couple of cuts were totally unnecessary given the tax cuts and tax credits etc etc etc.

I thought, wrongly that 3-4 hikes would be all that it took. Well here we are 6 hikes and counting. Nonetheless I am convinced that the long bond has it correct. In other words, from where we are now, "measured" hikes are going to bite and soon. Mainias have a way of going on far far longer than anyone thinks. Housing is clearly in mania land. This is NOT inflation, it is mania. IMO there is a huge difference.

I bounced my idea off Heinz today and he thought it plausible (we did not discuss likely)... That there might be a treasury revolt on the long end as soon as the FED pauses. To some extent, it might depend on the COT data at the time and what has happened to FNM. But even a short term spike in treasuries (that is all either of us thinks it would be), would be the final death bed for housing. Long term and without a major blowup in treasuries either (just one last spike) will be followed by new lows in yield.

That is my model right now.
Mish
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