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Politics : Welcome to Slider's Dugout

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To: Fiscally Conservative who wrote (11232)	8/21/2008 2:07:56 PM
From: jim_p	Read Replies (1) of 50323

The bond market has consistently been forecasting deflation despite the spike up we are seeing in the CPI and the PPI. They are looking past the current inflation problems that have been building in the markets and I would always side with the bond market over the stock market. The size of the credit problem will prohibit the fed from being able to increase the money supply enough to have any effect on the unwinding of the credit bubble. The USD is down big today because the markets fear the fed may be forced to bail out Fannie and Freddie. Over a trillion of capital will have been evaporated before it is over and some are now forecasting up to two trillion. This is not a manageable problem for the fed without a collapse in the USD. This is a time for patience. We may get another test of oil back up to the $150 level and if we do I would put everything I own into DTO. Oil will not fare well in a deflationary environment and the cure for high oil prices is and always will be high oil prices. Jim

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