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

To: russwinter who wrote (6670)	2/1/2004 1:26:35 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Job losses in the US are depressionary (a bit different from deflationary at this stage), but only after the credit to finance consumption is removed. We disagree. Inflation comes after a good portion of those worthless debts are wiped off the books. Until then, each job loss means less spending, not more. People will be FORCED to cut back, whether they want to or not, when jobs go. In the meantime given that those jobs are going to Asia, it is highly stimulative there, which is a point you absolutely do not see, despite the fact I've posted endless evidence of it. On the contrary. I agree there is indeed inflation of sorts in China and in commodities. We disagree on the sustainability of that. With the US consumer still being the consumer of last resort, and with mammoth job losses here to boot, unless and until China has a self-sustaining recovery, we will not and have not seen prices of finished goods rising. If China does become self sustaining, we are in deep shit regardless. No amount of interest rate hikes here will stop Chinese consumption of commodities. The FED is powerless to stop Chinese demand in light of job losses here and increasing demand there. That is a point you have not addressed either. We are using half (is it half?) of the world oil. What Happens when demand in China exceeds ours? Exactly how does a rate hike here cure anything? The Bank of England will raise interest rates this week, economists predict. With the UK economy growing in strength and consumer spending continuing, the bank is expected to raise the base rate by 0.25% to 4% on Thursday. The rise - the first since the 0.25% increase in November - would be another attempt by the bank to slow down seemingly ever-increasing house prices. Some economists now believe the Bank of England will raise interest rates on an almost month by month basis in 2004. God I hope they do. If they are silly enough to hike 3 more times, I will go on record as to saying they will not hike again for 3 years. The Short Sterling (Pound interest rate bet) will be a stunning buy. I will parlay Europe interest rates cut winnings over to the British Pound. If they are determined to wreck housing, they will wreck it. Then we see what happens to their recovery.