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: John Vosilla who wrote (80479)	3/29/2007 5:48:38 PM
From: westcoastflorida	Read Replies (1) of 110194

Once the economic downturn takes hold, price inflation will abate, as there will be nothing to sustain demand. Unlike the 70's, when a third of the workforce was under union contracts with automatic 'cost of living' adjustments which fueled endless rounds of inflation, wages will now stagnate and then decline. Rising property values - and the debt that could be incurred against them - gave rise to consumer demand in other sectors of the economy. Now, with the housing bubble burst, the credit tap has been turned off for the American consumer. No matter how far interest rates are lowered, it won't be enough to fuel demand for those upside down in debt in real estate as their property values decline. What about the price of imports as the dollar declines? If prices rise, demand falls. Again, the tap is turned off on the consumer. So the economies of Japan and China fall off a cliff. The Euro might be a 'safe haven'. But Europeans will wish it wasn't.

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