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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: GST who wrote (36574)	7/22/2005 10:38:55 AM
From: mishedlo	Read Replies (1) of 110194

1. Tax revenue in the US will plummet if our economy weakens, adding to our ballooning government deficits. 1a. I addressed tax revenue at length. Did you not see my replies as to what is happening in the UK. 2. Americans, not used to saving and having been recently reduced in income and assets will not be able to fund the deficits of the US government. 2a. I addressed this at length. American savings rate of 0% is not sustainable. It will go up 3. We will be MORE reliant on foreign capital after the housing meltdown, not less. 3a. Sounds preposterous. Look at all the less borrowing we will do. We are financing houses at 0% down. 4. The dollar, the wonder currency that has defied gravity for so long, will search all over the world for somebody who does not view it as a worthless currency with no future, while the Fed goes into overdrive trying to keep the economy "afloat" and adding to the belief that the dollar is something to be avoided rather than sought after as US monetary inflation soars. 4a. All fiat currencies are worthless. Even Faber does not think the US$ will drop off a cliff and he is more or less bearish on treasuries. 5. In time, baby boomers will show the pension system for what it is: bankrupt. 5a. Exactly. One of the reasons why savings must go up. 6. Falling US demand will not necessarily crash the global economy as others who rise to acquire a new level of status undreamed of in the 20th century -- a world where other people are increasingly prosperous and doing better every year while we discover the "joys" of poverty and watch our situation grow worse every year. 6a. An assumption that you make that is not proven and IMO highly unlikely. You think Europe and Japan are about ready to start spending like mad? I don't. The UK will lead the US in declining spending. The rest of the world can not pick up the slack of declining spending in the US, EU, UK, and stagnant spending in Japan Mish

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