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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Taikun who wrote (49340)	5/3/2004 9:34:55 AM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Taikun, I believe enormous debt is supporting high asset prices, especially the highly priced paper assets and enormously valued homes, the most liquid & easily traded, and the closest to the hearts & minds; I guess almost all paper assets are being valued for their imaginary capital gain potential and not so much on their actual income-paying ability; I figure most folks would be hard-pressed if they had to buy their homes again, if doing so without the benefit of a trade-in home, and thus only on the merit of their cash-savings, income, and loan-service ability at anything resembling normalized interest rate; I suppose debt is always cleared by repayment, or default. If cleared by repayment, then the repayments are not spent on other goodies, and if by default, then will be accompanied by debt-default engendered deflation of underlying asset value; I imagine, given the pervasively high debt-level across entire societies, and of the officialdoms, much debt, or even most debt around the world will never be repaid; I calculate that if much of the debt will not be repaid, then much of the debt is in fact worthless. If the aggregate debt is worth-less, then new debt will not be forthcoming; if so, much of the asset values backing the worth-less debt are then similarly worth-less; So, asset value deflations must be straight ahead. But the officialdom will fight asset value deflation with the ferocity of a cornered rat, and their only tool is a flood of cash, in ever-increasing quantity, and ever-decreasing value; So, currency debasements must also be around the corner. But currency debasement is invariably accompanied by inflation of things that is available only in limited quantity. So, natural resource inflation must logically be somewhere around. I cannot seem to get out of the logic loop described above, and I must therefore be thankful that the commodity correction is happening, and hope that the correction be dreadful. We cannot know the chronology of deflations/debasements around the world with any precision, as crisis travel through various national markets, and currencies grind against moolah. As I had earlier thought that a “miserly, miserable and all expected 1% interest rate drop by Al Greenspan will not be able to stop the bleeding” Message 15113604 <<January 3rd, 2001>>, I now believe a few half-hearted interest rate increase of a few hundred basis points will not derail the script of currency debasement, preclude natural resource inflation, or prevent eventual asset value deflation. Besides, Greensputin has neither the apparently uncommon sense nor the necessary political gumption to do the right thing. Therefore ruination straight forward, ... or, as CB had wisely pointed out, Message 20042246 In other words, the script Message 15113604 <<January 3rd, 2001>> is intact, but now only more horrifying. After ruination, rebirth, and rebuilding the debt bubble, eventually. Chugs, Jay