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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: THE ANT who wrote (47899)12/21/2005 3:32:44 PM
From: ahhaha  Read Replies (2) of 110194
 
If you feel deflation is in our future why do you not see a bubble in housing?

There never was a bubble. Only a needed price change to get the supply up. That's what markets do. When supply is low the price rises until new supply meets demand. The price had to rise quite a lot because the regulations put on home building were onerous and demographic changes plus growth in incomes forced and enabled the demand.

Further, tendency to deflate yields lower long bond rates. A substantial drop in mortgage rate won't pump re prices though. The market is saturated.

Deflation does not mean deflationary depression. It only means that one has to lower prices to garner greater revenues or share when dealing in scale environments. We can and will have a good economy within a regime of deflation. How does one see the deflation? How about in the prospects for large inefficient corporations like GM?

How are you also seemingly positive on stocks?

Because inflation is on its way out. With a good economy, and by good I mean inability to inflate, to falsify, to deceive, profitability will rise in the new and going efficient concerns. Obviously not all stocks will participate. A lot of them are left over dinosaurs which have been propped by the ability to inflate, and they will have to change or die by the hand of inexorable deflation.
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