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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (1343)	5/15/2003 4:23:02 PM
From: Box-By-The-Riviera™	Read Replies (2) \| Respond to of 4905

I think you probably addressed anything contained in the last 1000 posts here <g> many thanks!

To: pater tenebrarum who wrote (1343)	5/15/2003 4:35:28 PM
From: LLCF	Read Replies (1) \| Respond to of 4905

Welcome! Gotta run, be back later, but as for the current rally, don't forget the speculation: finance.yahoo.com It's baaaaaack. DAK

To: pater tenebrarum who wrote (1343)	5/15/2003 4:55:28 PM
From: NOW	Read Replies (1) \| Respond to of 4905

Great post HEinz! "But its different this time" except in Japan where its More promises of the SAME : nytimes.com

To: pater tenebrarum who wrote (1343)	5/15/2003 8:43:12 PM
From: LLCF	Read Replies (1) \| Respond to of 4905

<at the same time China's demand for raw materials has grown by leaps and bounds, which is the main reason for the rally in the CRB index imo. > You may want to check this out, courtesy of the folks on the metals threads: finance.yahoo.com DAK

To: pater tenebrarum who wrote (1343)	5/16/2003 1:35:11 PM
From: Perspective	Read Replies (2) \| Respond to of 4905

How does the Fed get out of this box? They can't continue to jam rates negative in perpetuity without absolutely crushing the currency, which causes inflation, which means even more natural upward pressure on interest rates, which means even more forced Fed purchases of bonds, and more pressure on the currency - vicious positive feedback. There comes a point where rates have been held so low for so long that ever increasing Fed purchases are required to hold rates down, and the forces become self-reinforcing. There becomes no natural way to recover from the freefall into hyperinflation. Once the Fed goes down the path of buying long-term debt, (or jamming short-term rates so far negative that they are directly financing negative rates on bonds; there's really very little difference in practice), it engages a cycle of positive feedback that can't be broken without substantial economic damage. Once the system is charged with too much free money at negative real rates, you can't let rates rise without a collapse in economic activity. And you can't continue to jam rates negative without a collapse in the currency and inflationary forces. It's a catch-22. Every day you hold interest rates negative, you are storing up negative economic charge to be released at a later date. If you hold rates artificially high, you store up a little positive charge to release later, which is what the Fed is supposed to do when the business cycle is peaking. They can then release it when the cycle is troughing, or even go a little negative, storing up a little drag for when the economy is back in full swing and can afford it. But holding them below zero for too long is storing up an immense destructive charge. Can somebody tell me, if you're the Fed, how you get out of this position without a depression or hyperinflation? BC

To: pater tenebrarum who wrote (1343)	5/18/2003 6:16:51 PM
From: Haim R. Branisteanu	Read Replies (2) \| Respond to of 4905

Hi Heinz, you missed one very important point and it is the fact that "STOCKS" are bought with "FIAT" money and as such their "value" in FIAT money can stay at elevated levels for a long time. Your theory is based on pricing stocks in REAL money which is hard to find in circulation today. As to the US stock market, one can claim for example, that the stocks did not go up if you price them in the fiat currency called EUR. In FX terms the US market did not rally at all......... as always it is all relative........ not to mention if one bought US stocks last year in Argentina's peso's At present I am not sure what can be defined as real money, but IMHO the present disconnect and turbulence in the FX market is an indication to the fact that the paper the Western World calls money is not REAL MOONEY any more, but something representing the perception of speculators and that of governments and administrations who issue this paper to manage their affairs. Further I think that China and India and to lesser extent Russia & Co, and the EZ Unions are holding the keys to the world economy. Of major importance to all, would be a realignment of those currencies which are pegged to the USD and a free market for the Yen which may alleviate the potential of crack in various derivatives