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

To: russwinter who wrote (9629)	3/7/2004 2:15:04 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Some major agreements here..... Lets look a some of the others. 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. There are only two things that can stop this trend IMO 5.1) It reaches its logical conclusion of every possible job outsourced 5.2) some sort of nuclear war or god knows what else in India and every call center in the world is shut down for days 5.3) protectionism The consequences of 5.1 are surprising: As soon as every possible job is outsourced, job rates are escalated sharply. We will be in a bind. Rising costs and huge relocation expenses if we try it again. Perhaps I am wrong on this but once it is all done, the cards are not in our hands any more but in India's and China's and they will do what is best for them not us. 5.2: Not sure I even want to discuss this but it will not be pretty. 5.3: Slowing world trade and recessions (that are coming anyway) but would be far deeper perhaps 6: Evidence is mixed, although may be true now in new housing. Jan. showed 370,000 houses for sale, and 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. Possibly ONCE more. Too many upside down loans and financing now for 6 years puts each and every car deal in more and more precarious situations. GM is being reckless IMO. It can not sell a new car to everyone every year or even every other year with financing for 6 years. Just can't go on forever. 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. There you said it, but you don't really want to admit it! All three are indeed in a scramble to jump off a cliff. The safe bet (and the one I am playing) is that they succeed. ggg 21: Agree, but would a crack-up and monetary meltdown, be even worse? I think so. Disagree - Too many derrivatives. It would be a spectacular crash. Too late to do anything about it. Sad but true IMO. Next stop: recession with no room to cut. ========================================================== One other factor I missed and it is actually a huge one. If and when China recovery becomes self sustaining, and China decides it no longer needs the US consumer, all bets are off. Mish