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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (66215)7/16/2006 8:42:58 PM
From: UncleBigs  Read Replies (1) of 110194
 
higher interest rates would accelerate the economic slowdown but are really unnecessary at this point. The front end of the economy has slowed dramatically and this will ripple back up through the other sectors.

Retailers are cutting employment and cutting merchandise orders. Soon manufacturers will reduce production, employment and raw material orders.

The downward spiral will feed on itself as employment losses lead to reduced spending. As the economy and stock market start to tank, people will begin to feel fear and further pull in the reins causing the savings rate to begin to rise just at the worst possible time.

A deflationary credit contraction is a near certainty in my mind and is well on the way.

Speculators who are camped out in the commodities will eventually get a rude awakening as a supply glut develops and the risk reduction trade accelerates.

The riskloves better find themselves a chair and sit down.
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