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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 (8689)	2/26/2004 8:26:31 AM
From: russwinter	Read Replies (3) \| Respond to of 110194

Very good response and processing, really one of your best. <1> Largely agree with your response (to my hypothetical).I don't think they can wait a month, but I suppose they might releases Feb and March at the same time. Mark that day on your calendar if so, it'll be a biggie. <2> Not need for them to lie, as they finally get some good news the Bushies can brag about. I agree this is not sustainable beyond about May. As the #6 shortages develop, a new word will enter the landscape, "temporarily furloughed" as opposed to layoff. <3> You can find this in the Mitsubishi link in the lab tools. btmna.com <4> I'm having a hard time picturing bond rallies (from 4.0% 10 UST) in the face of an inflationary shock, but then we live in strange times? What am I missing? Anybody? I think folks will rework their real return models and sell big time. <5> Agree, but March should be at least a poor month. <6> It's not counterintuitive based on my premise, and my premise is central to my case. financialsense.com If you see this shortage aspect as benign going forward then my case largely falls apart. Large industrial complexes, need a whole series of input items, and if enough are gone, the complexes collapse. The only way govt can intervene in the market is through war time like rationing, and that might happen. The US could and probably will release strategic reserve (China has no reserve to speak of yet), but those are all markers of very severe problems. <7> Yes, I mean one month. It could happen in March, not April BTW. <8> I'm not talking about rate hikes, I'm talking a serious global subsistence crisis cause by rapid demand depletion of inventories, and maladjustments. Monetary tools are helpless against this scenario. It will be the ultimate dog ate the homework excuse for the Wizards too. They will say, "would da thunk?". But, a good portion of the blame will lay at their doorsteps because of the hyperstimulation. <9> I've come around grudgingly to this view also. The problem is that they will need to try and save the currencies (all of them including the Yen and Euro) from a crack up boom. Once the monetary system collapses, everything is lost. Message 19848361 So how do they defend the monetary system in a crack up boom? I see the crack up boom odds increasing every day that goes by without a prophylactic. And every day that the BOJ buys a few billion Old Maid cards via intervention is like having unprotected sex. This is not some distant event either. <10> Agree with this, but my timeline is more intense and immediate. Again though, final outcome will be made much worse in a crack up boom. How do you see the risk of a crack up boom? Do you think players will sit idly by in the next stage of "race to the bottom" currency collapse. What will OPEC do for instance? A Euro rate cut in this environment will enhance the risk of the crack up boom by several factors. Up to now, they've been the stalwart heroes and defenders of western civilization in this sorry mess. If you really thought that would happen, then put everything in gold today. I don't think the Europeans will do this, but I could be wrong, so plenty of insurance makes sense right now. They are screwing around with the specs in gold at present, so this will be the last chance to get abroad. If they start tightening early and aggressively look out though, that's why you hedge gold with Eurodollar shorts. One or the other will work big. You position this according to your outcome belief. If you're like JW, who thinks they fiddle while Rome burns the medicine might be 5 parts gold (or something of real value: called Flucht in die Sachwerte by von Mises, could also be energy, food), and 1 part Eurodollar short. If you're like me it might be 3 parts gold, energy, real value () and 1 part Eurodollar short. Timing is tough and the key, as you can see all the cross current games being played. () Commodity like Flucht in die Sachwerte plays are not exactly new news. There is a large spec crowd in them, and if the CBs ever try to mount a significant currency defense, this play will fail. So there is risk there too. But if you truly believe in the fiddle while Rome burns scenario, this will be the ticket.