Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Jim Willie CB who wrote (5681)	5/5/2004 7:38:59 PM
From: RealMuLan	Respond to of 116555

Jim, exactly, that is what I meant<g>

To: Jim Willie CB who wrote (5681)	5/5/2004 10:20:23 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

price mechanisms will surely change consumption pattern/ jw Close Jim Willie but not exactly Try this instead: WAGE mechanisms will surely change consumption pattern Wages in REAL terms are falling like a brick IMO. It has taken round after round after round of cash out refis to support consumption. Yet, the price pressures on essentials are rising fast. At the same time price pressures on total crap is falling: TV's, Autos, VCRs PCs etc etc. Congratulations to Greenspan for saving a bunch of zombie companies that deserved to go under. Isn't this what Japan did as well? How many years did it take for Japan to dig its way out of this hole? 10? 20? Now we have overcapacity on tons of crap that EMPLOYS tons of people. What now? Cash out refis are toast. Business tax credits are toast. Since borrowing against the house is OVER, WAGE PRESSURES (not price pressures) will take over. Are wages going up? Will they ever go up again? When? By how much? Yet we hear idiots telling people that interest rates going up is a good thing. For who? Who can afford it? Will rising rates cause more hiring or will it destroy housing? Housing is ALL we've got. What percentage of the people in this country are employed in a business directly related to housing? (Mortage loan companies, homebuilders, appliance makers, carpets, trade work, etc). Second question, what percentage are indirectly related? (Home depot, Lowes, etc) So..... Greenspan saved a bunch of zombie companies that should have gone under (he saved them for his banking pals) and that debt has now been "offloaded" to pension plans, mom and pop, sub-prime lenders, the junk bond market etc. Just as at the 2000 top, people were saying interest rate hikes do not matter...... They are saying the same damn thing here! The US standard of living has peaked. Sing the death bell for SUVs. If energy costs rise (or even stabilize here) who can afford them without cash out refis? Looks like I was wrong and I think Russ was too. Its hard to NOT call a 100 point reversal in treasuries and not seeing it a mistake. Yet it is hard to not see that we got to where we did in disbelief of many a mistake either. Now what? Treasuries could go lower here but what country other than Australia, Canada, or New Zealand whose debt you would want to own? Europe is borederline recession. ANY slowdown in China will tip them over IMO. Do you really want Euro debt? Is the debt of China worth much? Even IF it was, until they float you do not have access to it. Japan? 40% of the GDP in debt! I guess this is the case for gold, but.... the market sure does not see that right now. So what then. The easy call IMO is that the easy money is gone. That means the carry trade goes away. How? By short term rates rising a bit and long term rates falling a bit. People talk about China and Japan selling their treasuries and sinking them, but my questions are: where do they get their consumers if they do, and where will they park their money if they do? Consumer demand needs to slow in the US and rise elsewhere. But.... There is NO demand elsewhere. Stalemate? I was sure of deflation. Others were sure of inflation. Now it looks like stagflation first, deflation second. With this debt and these wages inflation is impossible unless grenspan and Congress want to bail out taxpayers at the expennse of banks and corporate America. Not Likely Mish.