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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (66920)	10/21/2003 5:33:25 PM
From: Real Man	Read Replies (1) \| Respond to of 94695

I can't disagree with this statement. However, if the dollar started to lose 5-6c a DAY, perhaps, a lot of people would realize that the Fed has failed at managing price stability. I think the next wave of this bear market will do exactly that - strip people of confidence that they have in G-span Fed. I don't think we'll see the dollar losing 5-6 c a day. At least, I hope not!

To: mishedlo who wrote (66920)	10/21/2003 6:28:16 PM
From: Real Man	Read Replies (4) \| Respond to of 94695

M., the real problem the Fed is facing is the growing mountain of debt, which is now higher than ever in history relative to GDP, and keeps growing, thanks to the Fed. There are only 2 ways out: 1) default 2) hyper-inflation In both cases, bond holders get killed. Neither (1) nor (2) have been on the horizon lately, although there has been considerable amount of credit stress in late July, which threatened to grow into something bigger - the self- reinforcing credit bubble collapse. I think the next wave (call it C) of bond collaps will be just that, and it may have started already. With 10-year rates going above 4.62%, or the dollar heading into 80-s, there may be a meltdown. Personally ,I would not want to be anywhere near credit derivatives, or long any bonds, stocks, or anything denominated in USD at that time. Countries that have a lot of external debt and trade deficit usually suffer both (1) and (2), and it's most painful. The difference of US with the situation with Turkey, Argentina, Russia, Asia, etc. is that international debt is priced in USD. So, as, for example, Argentinian currency collapsed, their debt load in local currency grew. US external debt is priced in USD. However, folks are folks, and they are the same no matter where - they don't like losing money on bonds. So, they will sell 'em. BWDIK?