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

To: Steve Lokness who wrote (10535)	3/20/2004 1:52:02 PM
From: peter snowdon	Respond to of 110194

If housing crashes and this then pulls the plug from those spending their home equity on WalMart crap and SUV's - what happens to our economy AND what happens to the demand for commodities? the problem is that there isn't just one bubble, there's at least two -- one in the west, and one in the east. so on the one hand we are probably looking at a fundamental shift in price levels, as occurs periodically throughout history, rather than just a cyclical upswing; but on the other hand, like all fundamental shifts of this magnitude, the path from one level to another will be extremely chaotic and unpredictable, not just a straight upward curve with pretty oscillations superimposed upon us. fwiw: peter

To: Steve Lokness who wrote (10535)	3/20/2004 1:52:27 PM
From: mishedlo	Respond to of 110194

In recessions in the past it was often housing which pulled us out as interest rates declined. This time interest rates remained low and consequently housing strong all through the recession. If housing crashes and this then pulls the plug from those spending their home equity on WalMart crap and SUV's - what happens to our economy AND what happens to the demand for commodities? There is no doubt in my mind that commodity demand in the US will fall off a cliff soon. Not sure how that translates into world wide demand with China sucking up everything. However, given that there is likely hoarding now, and China is attempting to slow growth, I would expect this to filter into many commodities soon. Oil is a wildcard and not sure if that will be affected. In fact, oil once again could be a catalyst for a worldwide recession if prices keep spiking. When China starts growing for China consumption as opposed to US consumption, commodity prices could skyrocket more. Thus, I would think there is a huge correction coming at some point, but when I do not know, but betting against commodities right now is just wrong. Mish