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To: Tommaso who wrote (88478)	3/10/2001 2:28:16 PM
From: BigBull	Read Replies (3) \| Respond to of 95453

Ok, Tommaso and Iso, here is one of the better articles I've read recently that backs the inflation case: prudentbear.com The author is essentially saying that inflationary psychology is very much with us in the housing and oil markets. The reason, massive and ongoing credit expansion in the housing sector. Bubblicious type expansion. Interesting to note, however, is the authors contention that it will come to a grinding halt sometime midyear. Here is an excerpt (my emphasis added): ------------------------------------------------------------ The key fuel for the Great Credit Bubble can be found in the continued gross leveraging of the U.S. financial sector. And, once again, we see the phenomenon that when financial markets come under heightened stress, the financial sector responds by "going into overdrive." During the fourth quarter, the financial sector borrowed at an annualized rate of $1.079 trillion, or 13.2%. This compares to a pace of $733 billion (9.2%) during the third quarter. The financial sector has now expanded borrowings by almost $3 trillion during the past three years, a stunning increase of 55% to $8.431 trillion. Non-traditional lending now completely dominates the credit creation mechanism, with "Federally related mortgage pools" expanding credit at an annualized pace of $307 billion (vs. $225 during the 3rd quarter) during the fourth quarter and "asset-backed issuers" increasing credit at a rate of $298.8 billion (vs. $155.6 billion). And, of course, the government-sponsored enterprises continue to lead the charge in financial credit excess, with the GSEs expanding holdings at an annualized rate of $350 billion during the fourth quarter, compared to $278 billion during the third quarter, $239 billion during the second quarter, and $127 billion during the first quarter. Over the past three years the GSEs expanded their holdings of financial assets by a simply unbelievable $870 billion. I will go out on the limb a bit and predict that the current quarter will prove the climax for the GSE/mortgage bubble ------------------------------------------------------------