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

To: BubbaFred who wrote (49628)	5/6/2004 11:40:14 PM
From: elmatador	Read Replies (1) \| Respond to of 74559

This points to stagflation. Fighting deflation but economy not growing… If you create pseudo jobs, like government employing them to pass metal detectors and photograph people, invest in technology to track people, these employees will have an income but they won't be contributing to the economy. Somewhere in the economy there is a drain of money to pay form the pseudo jobs. Worse they introduce impedances in the economy since goods and people would move at a slower pace. The voters who are going to elect Bush must not read that. The whole show is for the masses to vote "well" during this election year. They should hear what the media shows everyday and the numbers look good here and look good there but the truth is hidden deeper. Once the next president is elected...

To: BubbaFred who wrote (49628)	5/7/2004 12:31:27 AM
From: Taikun	Read Replies (1) \| Respond to of 74559

BubbaFred, This is the second time you've posted this wrong assumption: Mauldin writes: "Today, 10-year rates are 4.57%. Thus, if rates were "natural," we would be seeing a yield curve that was much flatter. That means we should be paying attention... for before the yield curve goes negative, it first becomes flat". Pimco's Bill Gross puts the natural overnight rate at 2%. 457-200=257bp. This is not an unsteep or flat yield curve, it will merely reflect the fact that banks will lend less, because there will be less margin, and they will be more discriminating of borrowers. This is separate from the issues of a market crash. Besides, I give the Fed a 35% chance of a rate cut of 25bp to an overnight rate of 0.75% by Dec 05. Mauldin's flat yield curve premise for a market crash is a weak argument. If this is a premise for inferring his argument, the premise is not infallible thus the argument is inconclusive.