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

To: ild who wrote (15454)	6/18/2004 2:22:38 PM
From: el_gaviero	Read Replies (3) \| Respond to of 110194

I thought the Roach piece, “Heading for the Exits,” was pretty good, at least in this one way: in it Roach talks about a world I recognize: the problem of large imbalances – of decades low interest rates – of a money regime on permanent emergency footing --- of the inability for anybody to see how present trends can continue without major problems, and so on and so on, in short, he talks about the stuff that is the daily topic of this thread. But Roach’s piece also produces a feeling of un-reality. His reasonableness, obvious intelligence, knowledge, experience, contacts and travels haven’t been sufficient to overcome something that seems to me to lie at his core, a surprisingly high degree of naiveté. He refrain is that it is time for Greenspan to bite the bullet, raise interest rates, and get on with the job of putting the macro-economy back on a normal footing. Yes, sure. Who could argue with that? But I believe Roach’s formula is naive. We don’t have 50 billion dollar monthly current account balances, 1% FED funds rates, something like 80% of borrowed funds dedicated to funding non-productive assets like mortgages, and unhealthy amounts of the country’s available talent going to squeeze a few more dollars out of some carry trade scheme or other, because Alan Greenspan woke up one morning and felt like lowering rates. All the above problems of an unbalanced economy are symptoms. The problem that is the key problem, the problem that lies at the core, is that we as a country are not as rich as we used to be. (I am speaking here parochially about the good ole US of A, but I think Canadians are in the same boat, or in any case they are chained to us.) Reasons why we are poorer? The obvious: 1) consolidation of government in general, and of government in Washington in particular, consequences of which are everywhere (e.g., women of middle glass families have to work, which wasn’t the case for the generation of my parents --- but much, much else, such as lousy education, no real constraint on foreign military adventurism, and paradoxically enough, the rise of super-powerful corporations adept at getting the vast wheels of government to turn in ways favorable to them). 2) Labor arbitrage. American workers have to compete against foreigners happy to receive a fraction of the American wage rate. 3) Energy. Now rising rapidly, but a drain for over a generation. The country is stalled. The reason why is because the country cannot go back to a “normal, sustainable economy” without sorting out winners and losers. I think Stephen Roach is naive, because he has no idea what he is really advocating. The minute the FED gets serious about running a sustainable marco-policy, in the next minute there will appear real losers on the scene. This means that some groups, classes, and interests will find themselves getting “marked to market” and won’t be much fun to be around. The genius of Alan Greenspan is not that he is the Maestro of Money but that he is a maestro at avoiding necessity. He is the Mr. Macabre of central banking, pushing one scheme after the next, in the hope that before everything falls to pieces “something will turn up....something will turn up.....”

To: ild who wrote (15454)	6/18/2004 4:18:28 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

The MoP talk instead of action ploy, has liquidated the specs lopsided positions right as the Train Wreck unfolds, amazing really: commitmentsoftraders.com Notes: Energy sub group: from 267,579 on May 11 to 122,976, that's enough by my thinking. Copper: Specs now only 9,803 long. Grain subtotal: from 441,791 long on March 23, to only 78,332 now. Nasdaq subtotal, commercials 16,130 long on May 18 (before the rally) to short 26,812 now.