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Politics : Welcome to Slider's Dugout

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To: RonMerks who wrote (6429)	9/17/2007 11:11:19 AM
From: jim_p	Read Replies (2) of 50474

Good post!! It's important to understand were you have come from and more important WHY before you can understand where you are today and where you are headed. It was globalization with low wages that allowed for the central banks to maintain a policy of low rates and double digit money expansion. Their biggest concern in the past was the deflationary effects of globalization. It was the system that evolved from the S&L crisis that allowed for the excess risks in the system and the credit expansion going to extremes with credit being extended to people that it never should have been in the first place. It was the rating agencies that allow WS to take the system to even higher extremes in the past two years. It was the perfect storm that was the cause of one of the longest bull markets in history. So............where are we today??? Globalization has run its course and we are about to see the opposite effect. Just ask AG. Keep an eye on import prices over the next few months. With a lower USD and rising commodity prices and even faster rising foreign wages along with stagnant productivity the stage is now set for higher inflation. Inflation in China now at a 10 year high and rising. The credit driven stock market/economy is now history with the system that brought us here gone forever. Without confidence there is no system. This is no normal credit crunch, we are witnessing real losses that have shut down the system. What will take its place? The banks don't have the capital structure to absorb the outstanding credit that is currently in place from the old system. The rating agencies...........well you can bet they will go from being to accommodative to being way too conservative. The pendulum ALWAYS swings too far in both directions. So....what direction do you think the markets are headed??? I've got my bets. Jim

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