Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: russwinter who wrote (6633)	1/31/2004 8:14:51 PM
From: yard_man	Respond to of 110194

>>There are substantial supply and pricing constraints /pressures in the input goods used: lumber, copper, insulation, building materials, even skilled labor(plumbing, electricians). Other key industries facing bottlenecks, constraints : transportation, chemicals, food processing, steel, and all that feeds through to automotive. << yes to what you said on the input side -- no doubt -- but sustainability of demand of the finished products?? The pt for me is where these increaseson the input side are coming in the present cycle. As far as building inputs are concerned -- we may be right at supply constraints, but for how long?? -- autos, ditto?? -- the question is: what will be the killer for demand -- higher prices in the end product?? I think not -- and when the market turns for housing and autos toward a sustainable level of growth -- what then? We can both agree that arbitrarily loose money is the root problem -- but the level of demand is artificially high NOW. There is not a problem with capacity constraints at ALL stages ... we are talking about, in some instances, very TEMPORARY input supply constraints. That notwithstanding -- there are some specific instances in which to expect the prices of some of those inputs to remain high even as economic activity turns down -- esp energy and energy intensive commodities, but they don't have specifically to do with runaway demand so much as to long standing supply problems.

To: russwinter who wrote (6633)	1/31/2004 8:19:33 PM
From: yard_man	Read Replies (1) \| Respond to of 110194

re Al capacity utilization and obsolescence -- if you mean it won't be restarted -- I suppose you are probably correct, but from the standpoint of the US it is unutilized capacity. It is still economic capital which was invested in with an expected life longer than it wound up having and the effect is depressive, whether you count it as unutilized capacity or not. you can say energy prices are too high -- or I can say Al demand is not strong enough (prices are not high enough) to support making Al at the given price of electricity ...