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

To: gregor_us who wrote (7621)	2/10/2004 10:44:46 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

But I agree with the writer that we are pretty much on the threshold of becoming Japan. I think we'll have zero interest rates... I think you can count on it and as such is out and out deflation not stagflation. The UK is done hiking and Europe will cut as soon as the US$ falls low enough. If the US hikes at all, I may just go nuclear short. Mish

To: gregor_us who wrote (7621)	2/10/2004 10:50:22 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 110194

I disagree some locked-in capital inside houses has steadily been extracted we still dont have goods price inflation in order to bring about goods price inflation, we would need massive additional extraction which comes from actual sale, but without housing price declines if enough comes out via direct sale, then the economy goes into recession it all depends on how the extracted capital is used as KRich (banker) said, it is largely going into imported goods unfortunately, your evidence proves my point (KR point) if you were correct, then we would already have goods price inflation the fact that we do not means that dynamic does not produce the price inflation, as you claim the REFI movement has only extended the import goods bubble sorry, jim

To: gregor_us who wrote (7621)	2/11/2004 1:14:26 AM
From: glenn_a	Respond to of 110194

lambeth-palace. Re: the comment "wealth stored in fixed assets like houses is not available to "enter back into the economy" causing inflation". I believe the sentiment expressed here is that ultimately prices are set where the marginal buyer meets the marginal seller. In an asset mania, the marginal buyer is willing to pay extreme prices from a perspective of underlying value. In an asset implosion, the margin seller is willing to sell his assets for a song ... so desparate is he/she to raise liquidity, or so fearful is he/she of the price of the asset falling yet farther. If an asset bubble in housing prices has been financed with debt, and home mortgage loans taken out against the collateral of inflated home equity prices ... then should the market turn illiquid, and there develop a rush to liquidity, the apparent "wealth" inherent in an asset can literally evaporate overnight, as the price at which the marginal buyer meets the marginal seller plummets. Of course, it plummets because there is a surplus of home owners needing to raise liquidity, and there is a surfeit of home buyers having the liquid capital they are willing to part with to purchase a new home. Thus the importance to (i) attending to potential liquidity/illiquidity issues in an asset mania, and (ii) understanding the "sociology of ownership" of the assets underlying an asset bubble. Make sense? Or no? Regards, Glenn