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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (7772)	10/4/2002 10:22:22 AM
From: smolejv@gmx.net	Respond to of 89467

>>Knock, Knock, Knockin' on Heaven's Door<< Man, "AutoSummarize" in Word has still a long way to go: A public demands some consistency of thought if only to prove there is substance and mental discipline to the forecast. So let's explore the nuances of deflationary/reflationary timing for a page or two. Oil prices, sure, but that's a wartime, not a longtime bias. Debt and lack of pricing power is a dangerous combination. The real question is why the lack of pricing power? Remember the point about fixed rate debt being a deflationary villain? Mortgage rates will not follow the Fed Funds rate basis point for basis point lower because the extension risk and the negative "convexity" risk to the buyer (PIMCO) becomes outrageous if it does. If the American refinancing boom ends before a new investment boom begins, we are in a world of hurt. Twelve months at the most, even if Greenspan drives rates toward zero. In turn, the current level of U.S. Treasury interest rates - while at low historical extremes - will not appear to be so ridiculous or reminiscent of recent equity bubbles if deflation prevails in the face of the soon to be "non-refinancable" refinancable fixed rate mortgage. The title conveys much more, huh?