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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 (9623)	3/7/2004 1:37:42 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

<Does that sum it up nicely?.> Pretty good matrix, and fairly close to my view with some twists: agree on 1-4. 5: This process might be interrupted if US firms realize 3 is in play and may trap them with bottlenecks, especially in China. They might just freeze and re-assess the situation. 6: Evidence is mixed, although may be true now in new housing. Jan. showed 370,000 houses for sale, a fairly hefty 4.1 month supply. Question is are there new buyers at 5% mortgage rates to move them? In automotives, there is now evidence of an inventory glut, but will easy money move them? Probably, and will just use up more scarce input inventory: very imbalanced situation. 7: This is my critical and most important point. This is the "tipping point" IMO. This won't be cured without a bust, or major tightening (by all three in the symbiosis: China, Japan, US). I still think stuff will happen on the later point , but it will be ineffective and half assed. 8: agree 9-15: Up in the air, serious input goods inflation makes even weaker currencies a suicide policy. Just a question of when someone in the symbiosis wakes up to it? My guess is China first, but there seems to be a strong underlying desire by all three to drive off the cliff. 16-20, 22-24: agree 21: Agree, but would a crack-up and monetary meltdown, be even worse? I think so. 25: Agree, would add, "as if rampant inflation and train wrecks, followed by busts, don't matter."

To: mishedlo who wrote (9623)	3/7/2004 3:35:22 PM
From: yard_man	Read Replies (1) \| Respond to of 110194

nice, but I wonder if 9-15 aren't really some kind of complicated good cop / bad cop routine to mislead the sheeple. After all -- whether it is China or Japan or Europe -- what they want is competitive advantage -- a good relative X/USD exchange rate, for the time being -- since they aren't competing with domestically produced goods here -- they already won that round -- they all know the dollar must be going lower -- its slice of pie sort of thing AND possibly positioning for WHEN the US is no longer the consumption engine of the world?? in that light, I wonder if Japan's intervention isn't more about keeping the credit/consumption binge going here -- bad debts papered over there -- as much as it is about the desire for the yen being weaker ... Two interesting articles in the National Geopgraphic this month. One is on the environmental cost of China's rush to industrialize. Some interesting statistics on coal (they were considered a developing nation and thus exempt in the negotiation of the Kyoto agreement to limit greenhouse gasses) Another on Armenia -- sketches the history of what happened before / after the break up of the Soviet Union. If that article is right -- they went from a decent standard of living, to subsistence pretty darn quick when they were effectively economically blockaded by neighboring countries of Turkey and Azherbajain (sp?). When I think about how long we kept Iraq under sanctions, I have to wonder if the Iraqis themselves might not have taken care of Sadam on their own had we liberalized trade much earlier.