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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (798)	2/27/2004 9:21:47 AM
From: orkrious	Read Replies (2) \| Respond to of 116555

from minyanville The Washington Post reported that "more than 2,400 employers across the country reported laying off 50 or more workers in January, the third-highest number of so-called mass layoffs since the government became tracking them a decade ago. The Bush administration tried in late 2002 to cease publication of the mass layoff report, citing its cost. But Congress restored funding after state officials complained."

To: Wyätt Gwyön who wrote (798)	2/27/2004 1:30:26 PM
From: mishedlo	Respond to of 116555

Heinz on Treasuries Date: Fri Feb 27 2004 12:22 trotsky (Apollo@bond market) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved new lows in yields by mid '04 is still my prediction...i think it could go bonkers to the upside in short. NAPM at 63 is very bearish for stocks, and by extension, bullish for bonds. i realize that sounds counterintuitive, but note that MOST significant stock market tops have been marked by NAPM readings above 60.

To: Wyätt Gwyön who wrote (798)	2/27/2004 1:38:01 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Confused on SS? John Succo Mr. Greenspan publicly and correctly told members of Congress that it would be necessary to cut spending in order to reduce the deficits. In between those lines is the fact that economic growth is not sufficient to reduce our deficits, much less pay off our debt Even when we were running surpluses, the overall public debt magically continued to grow. More on that in a minute. Where I became confused is when he targeted Social Security as the linchpin to the strategy. In reality, no one of middle age really expects to get anything out of Social Security anyway, so despite the ranting and raving this comment produced, it probably will be accepted as inevitable. The thing that confused me is the fact that I don’t think cutting Social Security benefits will have any effect on the deficit. Social Security is currently “theoretically” in surplus and is thus only because it is a self-contained system: the government deducts money from people’s income directly to fund Social Security where no general government revenues (taxes) are used. Of course, this has not prevented the government (courtesy of the Clinton administration) from “borrowing” from the fund and spending the money on various programs, leaving the fund full of IOU’s and not cash. This is why even though the Clinton administration ran “surpluses” the actual debt “magically” never decreased: the surpluses were not real they were only “theoretical” thanks to government accounting chicanery. The problem with Social Security is that as more people retire in the future it will go into deficit, a “real” deficit. But don’t get confused (the key word here, as that seems to be the government’s strategy), that future deficit has nothing to do with the current one the government is running of around $500 billion a year. The current federal deficit is merely the shortfall per year between what the government takes in and what it spends and adds to the current total debt of around $7 trillion. This future deficit of Social Security is a contingent liability of the federal government. An independent think tank, whose numbers are being accepted now by most economists, estimate that the total future contingent liabilities of the federal government, predominately from Social Security and Medicare, are around $44 trillion. Since Social Security is a self contained system, cutting future benefits will reduce this huge contingent liability, but it will do nothing to reduce the actual yearly deficits. Mr. Greenspan certainly knows the difference. We can only guess as to why he emphasized cutting Social Security as a way to reduce deficits. Perhaps because the public is already psychologically prepared to sacrifice these benefits it is easier for the public to accept than if other programs were cut, which they will have to be if any progress is to be made on the actual deficits. Can you imagine the uproar if instead Mr. Greenspan had singled out Medicare for cutbacks, a system that is not self contained and would have a marginal effect on the actual deficits? By the way, Mr. Greenspan made no mention of private debt, which consists of consumer and corporate debt. If we add public and private debt to get total U.S. debt $30 trillion. This represents 300% of GDP, an all time high by alot. Perhaps we will find out the truth after the elections. Until then, prepare to be confused.

To: Wyätt Gwyön who wrote (798)	2/27/2004 1:50:10 PM
From: mishedlo	Respond to of 116555

Heinz on Treasuries Date: Fri Feb 27 2004 12:58 trotsky (Apollo@bonds) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved 'not a bull market' - i dispute that on the grounds that the secular bond bull market that began in 1980 hasn't ended yet - there is ZERO evidence that it has. could it end when new highs are reached sometime this year? it's possible - but we don't know that yet for sure. admittedly the dollar is a bit of a wild card, but the Japanese Yen also lost over 50% against major currencies between '95 and '98, and their bond market still perfomed excellently...and deflation continued unabated as well. Date: Fri Feb 27 2004 12:48 trotsky (frustrated@bonds) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i don't buy the 'dearth of buyers' angle. most large institutional investors have spent most of 2003 divesting themselves from govt. bonds - iow, there are 100ds of billions of pent-up demand from that source alone. note also WHERE the money went: into junk and emerging market bons and equities. never before has exposure to credit and equity risk combined be as high as it is now - everybody from banks to pension funds, insurance cos. and hedge funds is neck-deep in funny sounding currencies and their bonds, with the slimmest imaginable risk premium margin left over. this is a house of cards that will come crashing down faster than you can say 'what happened?'. credit derivatives are so cheap right now that one can only conclude that NO-ONE is left over worrying about risk - just as the global debt bubble is reaching fresh heights of absurdity. guess where all that money will go when the WilE Coyote moment arrives - my guess is govt. bonds and gold.

To: Wyätt Gwyön who wrote (798)	2/27/2004 1:53:13 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

From AD on the FOOL - on Deflation Today I went into a store and bought a inflatable matress. A big one. Measuring 1.38x1.9 metres. It includes an electric air pump (which has a surprisingly high output) and several adapter nozzles. In its entirety this cost me 30 Euros, and it wasn't even on sale, it was a regular price. The matress was made in China of course. I am continuosly amazed at how little any kind of hardware costs. How cheap this stuff has gotten. Just look at CD players, TVs, kitchen appliances, computers, toys. Yes I know a college education and health insurance is getting ever more expensive, but today you can buy a video recorder for 70 bucks, a dvd player for below 30. Remember when you couldn't get a video recorder for under 300 dollars? When was that, just over a decade ago? Remember when this kind of purchase used to be an investment? How much does cheap furniture cost today? How much did it cost 10 years ago? Of course today there's five times the amount of digital sh!t you can buy (and you probably feel you must) so you will still feel strapped for cash. But objectively, isn't it so that the vast majority of things that are being manufactured (now in China) have been getting cheaper and cheaper? The only electronic component that still feels expensive to me is a digital camera. But just give it a few years and you'll be picking up good quality for 50 bucks. I agree with Shilling here from a recent interview: Shilling: Inflation perceptions are an issue that you have to look at psychologically. All of us inherently assume that anytime we buy something at a lower price, it's because we're great bargainers. We are really good shoppers. It's our effort. But if we buy something at a higher price, it's because the devil personified is ramming it down our throats. People have a tremendous bias towards seeing inflation—and not a balance of inflation and deflation—in the goods and services they buy. I find this even in professional investors who really ought to know better. When I ask, “What about computers, what about telecom services, what about airline tickets?” They say, “Well, yes, all those prices have declined.” But it's a begrudging admission. We know that, if anything, the indicators overstate inflation. They don't understate it. Economists have known it for years. weedenco.com