The Epic American Credit and Bond Bubble Laboratory Message Board

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

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To: mishedlo who wrote (67908)	8/10/2006 1:53:29 PM
From: bond_bubble	Read Replies (2) of 110194

My opinion is that hoarding is prelude to both deflation and hyperinflation (in monetary terms). If credit deflation were to occur, this excess accumulated inventory will act to reinforce defaults. Sort of like what happened in Telecom industry where replacement cost (laying new fibre) was higher than the existing inventory (already laid underground fibre) - and the hoarders of fibre defaulted like crazy. Similarly, in the futures market, ethanol manufacturers must be signing futures contract with corn growers at high prices! (I'm anticipating high prices to materialize going forward). These ethanol manufacturers have to default or else buy corn at high prices!! I dont think peak prices have been reached. I think peak prices are going to occur in the future. I believe this is what Doug Noland is trying to convey and I believe this is also Andy Xie's and Russ's view. It is wrong to focus on just housing alone and talk about credit deflation. Credit deflation has to be talked in terms of where all the money is flowing during the boom. I believe there is still room for money to flow and continue the boom - housing market anxiety withstanding.

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