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

To: Wyätt Gwyön who wrote (11245)	4/2/2004 9:14:01 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

<what exactly do you expect the Train Wreck to be? > A capacity (excess capacity/output gap is another Greenspan myth), production bust, that over time starts to put commodities back in equilibrium and balance. Right now the shortages are getting so acute that you couldn't get a commodity bust without the production bust first. That's because the shortages are too wide spread and necessary to the input process. Example you need coke (and energy) to make steel, steel to make autos, etc, substitution are very difficult, expense and time consuming. It's a horse and buggy effect, and I think that's what most are missing about this. The only way to have possibly avoided this was for the CBs to have cooled things off six-eight months ago. Instead they encouraged more of it, especially with the moral hazard "reflation" road shows of Greenspan and Bernanke, and the wild intervention by the Japanese, including a degree of speculation (what von Mises called flucht in die sachwerte: flight to real goods). More background: financialsense.com