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

To: mishedlo who wrote (7306)	2/8/2004 10:28:20 AM
From: philv	Read Replies (1) \| Respond to of 110194

Is it possible to have a depression while real estate values are climbing? In my home town, a recent headline was that real estate is up 20%/year. And of course the construction industry is booming. England's attempt to contain the real estate speculation may be instructive, in that it seemed not to affect the B.P. In my experience, many people, now sitting on the fence, will decide to trade up or buy now, rather than wait until interest rates climb so high that they can't afford housing in the future. There is a big bust coming in real estate sometime, and if it will be like the last one I experienced, the bust comes very quickly when it begins. However, last time it was precipitated by very high interest rates. Perhaps this time, it will come at much lower levels given the already high values. But for now it looks like it's business as usual, and we have a ways to go before anything like the above will happen. Meantime, bubbles keep growing and more and more inflation is being baked into the pie. Tomorrow's FX market will be interesting, and most interesting of all will be the YEN. Will Japan roll over and allow the YEN to appreciate considerably? I have been wondering what the consequences for US treasuries will be if Japan is no longer a big buyer, and how that will affect interest rates. I would think that govt. treasuries would be under pressure and rates would rise even as the dollar declines. Japan has been strongly committed to intervene in their currency in the past, and has paid a huge price this far. And, if the Yen rises, what will that do to the rest of Asia? When interest rates do begin to rise, and the bubbles begin to burst, who will they blame? Fingers will be pointing all around, but most will blame the US FED and US government. Europe and the EURO will escape much of the criticism, and will be seen as having had a more responsible monetary policy. The best of a bad lot. It will be interesting to see what will happen to gold if the $US rises against the EURO, but drops against the YEN.