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

To: John Vosilla who wrote (22634)	2/2/2005 8:51:16 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Perhaps a true cleansing and deflation/depression won't take place unless the long end rises several percentage points first which you say has zero chance of happening if I recall . I did NOT say it had zero chance. Neither did Heinz. Yes it COULD happen that way, it just does not seem likely. A US$ crisis or panic could cause it. Japan mass bailing of treasuries could cause it, there might be other things that could cause it as well. I do not think they are likely, but they sre are possible. BTW a "few" points does seem absurd, but surely 150 bps on the top end would crush housing wouldnt you agree? I do not think that 150 bps is likely either. Far more likely is a housing crash and/or agency widening that causes a flight to safety of treasuries. That whipsaw could even sink FNM. If yields do get as high as you suggest there will be a depression IMO. Otherwise, and afr more likely we just go the slow torture route like Japan with the FED attempting to fight it all the way. Mish