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

To: glenn_a who wrote (2224)	11/16/2003 12:14:30 PM
From: glenn_a	Respond to of 110194

Correction to previous post ... ((To my mind, whether interest rates rise in the U.S. is almost "zero" dependent on Greenspan's career intentions, and much more dependent on elite geopolitical machinations over the next year ... and I'm not sure at all that U.S. economy will hold up until the 2004 election.)) Umm, while I do believe "elite" geopolitical machinations play an important role, don't want to minimize (a) where the global economy is in the K-wave, and (b) the limitation of the human capacity to control events and manage complexity/chaos. Along the line of point (b), Jim Puplava had a wonderful interview with Bill Bonner of The Daily Reckoning this weekend. See the interview at: netcastdaily.com ... I liked Bonner's emphasis on the limitations of the human capabity to understand and control events in their world. Regards, Glenn

To: glenn_a who wrote (2224)	11/16/2003 12:47:35 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Perhaps Jay could expand on this. I will hazzard a guess that Jay will tell you what the US does with interest rates is totally irrelevant as to China's path for the future. The solution for the US is lower consumption, stopping reckless expansion of credit and living within ones means. Raising of interest rates is not going to help US citizens to live within their means. It will make it harder for them to do so. We need less military spending, less govt spending, less state spending, and less reckless granting of credit. Much of that credit and liquidity comes from FNM and that animal has to be reigned in. FNM is quite literally printing money IMO. Regardless of interest rates we simply are NOT going to start exporting more stuff. Period. We can not compete with China. Not gonna happen and Jay will tell you that as well. Perhaps we need to devalue the US$, but the entire world wants to devalue against the $ to keep the US consumer buying. That has to stop and that is the heart of the trade issue and that has little to do with interest rates IMO. Foreigners are willing to buy US treasuries to keep the US consumer spending. That is the issue. At some point that will stop and that WILL affect the treasury rate and at some point that might force an interest rate hike. You see thge bond market or the treasury market might force this issue, not the other way around. Right now, everyone thinks it is their best interest to keep US consumers buying so the whole world is sucking up treasuries. Raising interest rates will stop consumer spending and kill housing but I doubt it does much for US exporters who have to compete against China. What it would do is probably cause an instant world-wide recession and I doubt anyone wants that. Thus everyone keeps buying treasuries and trends continue until everyone chokes and go on far further and last far longer than anyone remotely thinks. No, they will keep on inflating this bubble until something triggers it to burst and I do not know what that will be. It will NOT be inflation that forces a rate hike as the inflation we are experiencing has more to do with China sucking up natural resources than it does with much of anything else. BTW "NEVER" MIGHT be a bit harsh, I could see a 1/4 point hike, a severe recession following after the second one, and that will be that. The reason why NEVER is very possible is that I half expect Greenspan to retire next summer (if the economy stays together until then, he might "declare victory" over deflation then retire and attempt to pin the problem on his successor). No matter which way you turn there is no easy way out. Higher interest rates will cause a worldwide recession IMO and guess what the attempted cure will be? You got it.... Lower interest rates. There is NO cure other than a lower standard of living for the US, and a higher stanbdard of living for China and emerging markets, and I bet Jay would agree with that as well. Tell me how higher interest rtates solves all these problems. IMO all it does is create new ones, and the resultant recession stemming from accelerated loss of US jobs, a housing crash, and other problems will bankrupt our system. Will the world fight a US $ devaluation. Hmmm. Is that why China does not want to unpeg? M