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

To: yard_man who wrote (7850)	6/11/2004 9:02:24 PM
From: dpl	Respond to of 116555

" On what basis do you compare that cycle to the prior cycles and conclude it was a mini-bubble -- is it because the S&Ls had to be bailed out a little while later" Yes.The S&L problem was from a "mini" bubble in commercial RE.The recession that followed officially ended in 1991 but the Fed had to keep rates at a 30 year low until 1994.The stocks bubble kicked in in 1995. "1) preventing the bust of the real estate bubble" I think that is the main thing on the Fed's mind.They are doing everything they can to prevent it even telling people to get adj mortgages.<g> "2) preventing its demise from sending us into recession / depression" I believe that deflation is like stepping off a cliff.If you take one step too much then nothing can stop the results. "Shortly before the nazcarp bust, I received a couple of lump sums -- one was from my grandfathers estate and another was a gift from my in-laws -- I applied the sum from my grandfathers estate toward my mortgage and the amount from my in-laws to pay off a note on my truck -- I remember telling one of our PhD consultants this -- and look he looked at me very strange and said -- "You know, they say you shouldn't do that ..." Intimating that better returns could be had by investing the money -- I was, at the time, applying these amounts to loans having 6% and 7% rate -- I viewed as an instant return -- elimination of future interest payments. He thought I was nuts. " Back in 1983 my father-in-law thought I was nuts when I told him that some day I would have a mortgage lower than his 6.75%.It's 5.75% <G> I am a great believer in long term inflation\deflation cycles and they said to me that 1980 was the long term inflation high. Good trading..David