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

To: mishedlo who wrote (8545)	7/1/2004 12:17:13 AM
From: TH	Read Replies (1) \| Respond to of 116555

mish, Great attempt at putting a fix on things. I've not had much time to keep up with things lately, but your great thread allows me to get a weeks worth of news and (good) analysis in about an hour. Of course we can't skip Winter. Chance told us so! President "Bobby": Mr. Gardner, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives? [Long pause] Chance the Gardener: As long as the roots are not severed, all is well. And all will be well in the garden. President "Bobby": In the garden. Chance the Gardener: Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again. President "Bobby": Spring and summer. Chance the Gardener: Yes. President "Bobby": Then fall and winter. Chance the Gardener: Yes. Benjamin Rand: I think what our insightful young friend is saying is that we welcome the inevitable seasons of nature, but we're upset by the seasons of our economy. Chance the Gardener: Yes! There will be growth in the spring! Benjamin Rand: Hmm! Chance the Gardener: Hmm! President "Bobby": Hm. Well, Mr. Gardner, I must admit that is one of the most refreshing and optimistic statements I've heard in a very, very long time. [Benjamin Rand applauds.] President "Bobby": I admire your good, solid sense. That's precisely what we lack on Capitol Hill. Good Trading TH

To: mishedlo who wrote (8545)	7/1/2004 9:36:06 AM
From: Perspective	Respond to of 116555

Wow - excellent post. You've been thinking about this way more than even I have. I'm working on a bigger response, but I'll say that I agree on almost everything. I wonder, however, with the degree of globalization, if the cycles can be so dispersed inside individual countries that are such a huge part of the global system. I could actually see China headed into Summer completely out of phase with the US headed into Winter - synchronized economic contractions for totally different reasons - but I don't know enough about Chinese economic conditions to comment on their position relative to K-wave theories. I do know that it sounds like they've built up classic inflationary forces and have a much different (and insulated) monetary picture, and that could mean a 1970s-style inflationary experience may be at hand for them as the rest of the developed world muddles through Winter. On commodities: I was thinking about the fact that the gold bull is really only a bull in dollar terms. Most of the gains have come through dollar weakness. Perhaps Prechter will be right after all; maybe gold in global terms has yet another low to go. It sounds kind of like Financial Relativity - everything is relative, measured with yardsticks that vary with time. All you can do is look at ratios - how many dollars per ounce of gold? How many dollars per unit of S&P500? How many Euros per barrel of oil? How many barrels of oil per unit of S&P500? Regarding Greenspan's actions: the sick feeling in the pit of my stomach says that he is actually making Winter worse by causing further increases in debt and risk that will ultimately have to be worked off in a longer, deeper correction than would have otherwise happened. How would you and I try to ease the pain of Winter? We'd likely take actions to encourage savings and paying down debt - ideally debt would be targeted at a relatively stable level relative to GDP over the long haul. Instead, he's jammed short-term rates artificially low, building debt ever higher. BC

To: mishedlo who wrote (8545)	7/1/2004 1:56:47 PM
From: NOW	Read Replies (2) \| Respond to of 116555

i would say the seasonal analogy is only useful to a point. A fun idea to toy with, but show me empirircal evidence that it is useful to protect ones wealth. A study of history shows that times like we are currently in have occured with some frequency throughout the ages, and when it did occur, preservation of wealth was challenging to say the least , and that their were simultaneous powerful cross-currents of inflation and deflation at work. If a guy like Faber thinks that it is darned hard to fugure out what possibly could be a sfe investment, and that the best course of action is to spread your investments around the globe physically, then i listen.

To: mishedlo who wrote (8545)	7/1/2004 6:11:16 PM
From: Perspective	Read Replies (1) \| Respond to of 116555

<Where does that leave us? US - very late Autumn but looking like a false Spring> Don't see how that could be. Autumn would have commodities still deep in bear territory, and bonds and stocks moving in lockstep like the 1980s and 1990s. We (the US) have several commodities that appear to be in new bulls, or at least in positions that would require huge reversals in order to establish new Autumn lows. More importantly, stocks and bonds have parted ways since the beginning of 2000, with stocks falling as bonds rose through 2003, and then stocks rising with falling bonds from then through the present. That's a hallmark of the transition to Winter. We are clearly 3+ years past the end of Autumn. As I noted somewhere else earlier, the peak of the debt/GDP ratio in the 1930s experience happened some three years following the stock market peak. That's when Winter really got vicious. BC