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

To: mishedlo who wrote (13668)	10/19/2004 1:37:48 PM
From: orkrious	Read Replies (1) \| Respond to of 116555

trotsky (frustrated@dollar) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i haven't made up my mind yet on targets, but imo the DXY will certainly make fresh post WW2 lows at some point in the next few years. note that economic growth isn't really the primary determinant of relative currency valuations. what's more important is how much of each currency is printed up, and what the ( real ) rate differentials are. also, European and US economic stats can not be compared 'as is'. you first have to factor out the hedonic indexing and other statistical trickery from the US stats to be able to compare them. i've seen a recent estimate that US GDP growth has been artificially pushed up by 3% per annum since 1980 with this statistics cr*p, and that sounds about right to me. it's the main reason why we nowadays get 'jobless recoveries' - the recoveries only exist in the form of statistical artifacts - when the government claims "2% of GDP growth" it means GDP actually shrank by 1%. the non-hedoned data paint a far more sobering picture. imo Europe has a huge advantage inasmuch as it sports a far higher savings rate - even though Europe's economic policies are generally far too left-leaning, it is better prepared to weather future economic storms. note also that the major euro-zone countries have NOT had a housing bubble. there has been one in the UK, but that's not in the euro zone. Ireland also had one, but neither Germany nor France have suffered a housing boom. in fact, German house prices have declined by an aggregate 5% over the past decade. trotsky (frustrated, 12:25) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved " "It's absolutely true that it wouldn't be in the interest of the world to do it, but any one country might think, 'I'll beat the crowd and diversify first,' " he warned. "I think that's the more likely scenario." " this is precisely why the often heard argument 'the dollar can't plunge because nobody wants it to' makes no sense whatsoever. it doesn't depend on what 'everybody wants' or doesn't want to happen. it depends only on the weakest link in the entire chain - as soon as one of the myriad holders of dollar claims decides to beat the others to the tiny emergency exit door, it's curtains for the entire 'paper reserve' con game. Date: Tue Oct 19 2004 12:32 trotsky (EJ, one more...) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved " If the Fed lets wage inflation rise 3% - 4%, mortgages taken out at low fixed rates will likely stay affordable." wage inflation is not something the Fed can just 'produce'. the major factor determining wage growth is the global marketplace - or more to the point, it's China. what's more, a lot of mortgages have been done as ARMs, i.e. floating rate arrangements. those would go bust if wage inflation were indeed to return to 3-4%. but not to worry, because that won't happen anyway. it'll be a surprise for everyone, in the end. the bubble will burst IN SPITE of lower interest rates imo. trotsky (EJ@housing bubble) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the reason why the slowdown in transactions hasn't yet resulted in bigger price falls is the velocity of turnover in this market - it's not exactly a liquid market where you can buy and sell within seconds. but imo it will happen, in a sort of slow motion crash. one only has to look at Japan, where land prices have been declining between 5 to 6% year after year after year...the cumulative losses add up to a huge debacle by now. trotsky (art vandila, 10:30) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved no, definitely not. stagflation is the technical term describing the Kondratiev wave's 'summer' season - characterized by a supercycle secular stock bear market, multiple recessions, a sharply rising money supply, sharply rising interest rates, and sharply rising aggregate price inflation. the latter three are completely missing right now, since we're in the K- winter.