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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (74808)12/5/2006 5:02:36 AM
From: Mike Johnston  Read Replies (1) of 110194
 
You perform fine analysis. However you have fallen into a trap.
Your analysis can only be applied under following conditions:

1. Free market economy with limited government intervention
2. A sound currency
3. Accurate economic data

My short answer is that we can no longer apply conventional economic analysis, because we no longer have the three conditions mentioned above present in our economy.

Some rhetorical questions:

1. Why do we have a huge yield curve inversion with rampant inflationary pressures and stock indexes at record highs ?
Why has the ages old relationship between yield curve inversion and recession broke down ? Why now?

2. Why are dollar reserves at FCB's growing at 15% a year and yet supposedly dollar money supply growth is only at 5% ?

3. Why M4 growth in UK is 14% and yet the dollar is collapsing against the pound ?

4. This question you have asked yourself: "I am the only one that finds it odd that the Fed is no longer concerned about the systemic risk at Fannie Mae or the derivative mess they are in even though Fannie Mae has not filed a quarterly report since 2004? Did systemic risk vanish overnight? "

5. Why is bond market ignoring collapsing dollar, busted budget, soaring stock market and soaring commodities ?

6. If a house has risen in price from 100K to 500K and then corrects to $400K, is it such a big deal ? Is it deflation ?

7. Is 11 fold increase in Zimbabwe stock market this year a bubble ?
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