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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (1651)	10/25/2003 10:58:42 AM
From: austrieconomist	Read Replies (1) \| Respond to of 110194

If that's your idea of "two cents" I would hate to load you up with a dollar. <g> Thanks for your commentary. Canuck Dave on Russ' PM thread also gave me the Noland update. When I have the spare time, I look at the monetary characteristics and theory simply to try to give me an edge in my investment dabblings. I have been a believer since the time the dollar peaked that the one constant theme in the investment markets was a diminishment in the value of the dollar. This dictated to me that the sensible approach was to build a diversified portfolio of investments that would balance themselves but within the context of that theme: euro based government bonds; Kiwi, Aussie and Canuck bonds; value based common stocks in S.E. Asia; pure commodity (including energy) plays in futures, funds and common stocks; gold futures, funds, and common stocks.

To: orkrious who wrote (1651)	10/27/2003 5:23:07 PM
From: NOW	Read Replies (1) \| Respond to of 110194

not sure why Noland insists that money supply link to refi activity is spurious....

To: orkrious who wrote (1651)	10/30/2003 7:39:38 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

<But talk of a collapse in net mortgage lending is poor analysis.> Although I see Noland's point about money supply, I'm a little perplexed by his conclusion. First I'm not sure anybody is talking about a collapse (yet) in mortgage lending, just a normalization or slowing, which in my view is enough to put the economy into trouble. There are some numbers from Contrary Investor that put this credit sector growth into perspective. From the 7/31 piece are datapoints that show the importance of real estate and mortgages: absolute $ growth since YE 1999: household mortgage debt: $1.7 trillion consumer debt: $334.8 billion corporate debt: $742.2 billion The 9/23 CI piece "Sittin' on top of the world" should be read in it's entirety, but here's a snippet: As you can see, over 75% of total US financial sector debt is primarily driven by the securitization of various classes of household liabilities. The GSE's (the government agencies) and federally related mortgage pools are the primary conduit for mortgage credit creation in this country. ABS (asset backed securities) issuers package and resell, among other things, household liabilities such as credit card debt, car loans, etc. In essence, the US financial sector is the most meaningful provocateur in terms of having facilitated the intergenerational change in attitudes toward household leverage that we spoke of earlier. In the recent quarter and over the last year, liability expansion for these big three are as follows: (Remember that in the primary function of financial intermediation, liability growth is closely linked to rate of change in asset growth.) yr/yr through 2nd qt: GSE's 11.2% Mortgage pools 8.1% ABS issuers 13.4% financial sector 9.8% But as you know, and at least up to this point, the general level of interest rates in this country bottomed during the middle portion of the final month of the second quarter. Although in the pipeline borrowing activity will surely spill over and show up in 3Q US financial sector results, we are already seeing evidence that the residential real estate cycle may be drawing to an important cyclical conclusion. Although we have had a recent rally in 10 year Treasury yields, refi activity in this country has dropped off a cliff. (see chart at article)