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

To: Crimson Ghost who wrote (1998)	3/14/2004 3:35:40 PM
From: mishedlo	Respond to of 116555

FNM holds most of those. FNM bailout? Is that what you are proposing? Do they need to be bailed out yet? Even if so, how does it let the homeowner off the hook? How are individuals and states going to get out from the burden of higher and higher debt levels? IMO it takes DEFAULTs/Bankruptcies to do that. Or yesrs and years and years of savings and lower standards of living. Either way, that is debt and monetary destruction and that is deflationary. Again I repeat my claim that the FED simply can not inflate itself out of debt. All it does is produce bigger imbalances that will be destroyed. All you inflationsists act as if Greenspan can succeed. I proclaim that he can not, and that ultimately most of this credit is worthless. If we had higher wages and therefore higher tax revenues to pay it off we would indeed have an inflationary envirnonment. That is NOT what we have. If all of this credit card debt can not be paid back, and people do not have the means to do so, then that debt will perforce be destroyed. Probably by bankruptcies. That debt destruction by its very nature is deflationary. PERIOD. Do you doubt that it will happen? When is EVERONE right? How many people see deflation here? Myself, Darffot, Lambott, Heinz, plunger? Any big names? Name one? Mauldin is a "muddlethruer" not a deflationist. Pretchur is one but his is almost universally laughed at. Too many mis-timings of all kinds of things to be take seriously. Any others? What about the stock market? Where do you see it going? If the answer is substantially lower then that to is hugely deflationary. We have a rising PPI (CRB) and rising home prices. All other signs IMO point to deflation, 1) loss of jobs 2) overextension of credit 3) falling wages 4) peaked stock market (assumption) 5) hign inventories of Cars 6) no pent up demand for goods and services 7) falling consumer sentiment 8) signs of recession in Europe 9) China acting to cool off excessive growth 10) The bond market itself - combined with excessive rampant pessimisn about bonds and extremey optimistic views on equities The whole world falls so frigging flat if US housing stalls it is not even funny. The balance is so so so far tilted towards deflation it is not even close. That does not mean there can not be pockets of inflation (some perhaps even MOST of which would not have any meaningful reaction if rates were hiked) You want instant depression? Put Russ in charge of things. Mish