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

To: marginmike who wrote (1398)	3/6/2004 3:42:27 PM
From: mishedlo	Respond to of 116555

Parts disruption at Delphi This could be major news with serious implications. Let's follow the discussion: Original post from ILD: SAGINAW, Mich. Court documents show that Delphi Corp. (DPH) fears a stop-shipment from its steel-parts suppliers could result in losses totaling $ 10 million a day. Several of Delphi's plants could be idled in as soon as one day if the shipments are halted. That could in turn force General Motors Corp. (GM) plants to idle in as soon as two days. Supply shutdowns also could affect Nissan Motor Co. (NSANY) as well as GM's Opel and Vauxhall units. read the rest here..... Message 19886398 RussWinter View of the disruption: Message 19886876 Mish View of the disruption: Message 19886967

To: marginmike who wrote (1398)	3/6/2004 3:59:54 PM
From: mishedlo	Respond to of 116555

MM concentrate on JOBS JOBS JOBS. That is the key to this mess. Rising unemployment, falling wages, rising debt, rising healthcare and housing costs is a very very lethal combination. In spite of rising home prices, %owned is at all time lows. People are on borrowed time without a job. This post puts it in a nutshell. Message 19886626 As far as the govt printing at any cost.... Didn't Japan try that? Did it work? Are they STILL trying? Right now, in the US, it is sort of a stalemate because people (unlike japan) are taking the money and spending it. But at a price. A huge price: higher debt. Debt levels here are nutzoid unsustainable, especially in light of piss poor jobs. What happens when the banks refuse to lend due to credit risks? They can print all the money they want but if the wealthy did not spend, businesses do not expand (we have overcapacity everywhere IMO but Russ would disagree), where does it go? If it goes nowhere it is not inflationary. Commodities are an ill symptom of money sloshing around but it did not create any jobs except in China. China wants to slow down now too. GM is building cars no one wants and inventories are stacking up. States have to cut back spending. The ONLY things propping this mess up are 1) housing and 2) easy credit. As soon as one goes, it all dies. Notice the price squeeze on manufacturers. No one can raise prices. GM is offering $7,775 in rebates on a grand prix. Wages falling, bankruptcies and foreclosures rising. Something like 3 out of ever 100 houses in Ohio is under foreclosure proceedings. Amazing. M3 is falling and bad credit will be destroyed. M

To: marginmike who wrote (1398)	3/6/2004 4:11:49 PM
From: mishedlo	Respond to of 116555

BTW I did come up with an inflationary scenario but I do not think it will be done. For the simple reason is that it would destroy the creditors (the wealthy). Here it is: The Govt prints money and gives to to every household and to every state to the tune of the exact amout of everyones debt. Thus all debts (except the federal govt is wiped off the books). The US then defaults on its debt. OK who wins. The more debt one has the bigger the winner. Essentially the poor win at the expense of the rich. Banks, credit card companies, ect are paid back in virtually worthless Dollars. Bondholders (the wealthy) and pension holders all get paid back in worthless US$. The US would probably be unable to buy much foreign goods after that and the price of oil and everything else would skyrocket. There might be other repercussions that I can not figure out right now. We have gone the OPPOSITE route. New bankruptcy laws are proposed that would keep people tied to the "company store" forever. Declare bankruptcy and you STILL owe money. If and when the mountains of debt are pain back we get inflation or even hyperinflation, but that would take a massive amount of printing and it would have to go directly to the people to pay off debts. If the printing just results in more debt. it is just more debt that will have to be destroyed. My proposal would do just that, but at a cost to the wealthy. Perhaps we have massive social unrest 10 years down the road and something like that happens, but in the meantime we are headed the route of Japan. A long slow painful death, attempting to fight it all the way.