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

To: ild who wrote (9426)	3/5/2004 11:47:50 AM
From: MulhollandDrive	Respond to of 110194

i found this comment more illuminating.. With excess liquidity creation not being absorbed by the real economy, it is now slopping over into an increasingly broad array of asset markets. That’s what bubbles are all about.

To: ild who wrote (9426)	3/5/2004 12:28:01 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Roach The last paragraph is the key paragraph. Here goes: With risks of new asset bubbles rising, there is a growing urgency for a normalization of US interest rates. Unwinding an ever-dangerous carry trade is a small price to pay to avoid the most treacherous endgame of all. America, in my view, is probably only one bubble away from outright deflation. Paul Volcker had the courage to stand up to inflation in 1979. Now it’s up to Alan Greenspan to wage an equally heroic battle. morganstanley.com =================================================================== Unfortunately the "remedy" he suggests would quickly bring it on. Mish

To: ild who wrote (9426)	3/5/2004 1:08:16 PM
From: russwinter	Respond to of 110194

<Roach: "Sure, commodity prices are now surging, but unit labor cost pressures are going the other way — down 1.7% on a year-over-year basis through 4Q03. With labor accounting for five to six times the share of commodities in the overall business cost structure, the forces of disinflation continue to have the upper hand."> I wanted to comment on this. Roach, like most may be missing the recent nature of this inflation. It's really a six month rocket launch and A LOT has happened of late. In fact, it's not as benign on the salary and wage side as these analysts would have you believe. From today's employment report, the salaries paid number is up 0.6% (2.4% annualized) over the last three months. That's not exactly "disinflation", and combine that with 20-30% higher input prices, and you have plenty of inflation to worry about.