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

To: russwinter who wrote (28501)	3/12/2005 7:53:38 PM
From: Les H	Respond to of 110194

Treasury borrowed $ 38 B at 4 percent last week, and now is willing to lend $ 17 B at 2.2-2.5 percent next week... fms.treas.gov

To: russwinter who wrote (28501)	3/12/2005 8:53:03 PM
From: mishedlo	Respond to of 110194

Thoughts on the trade gap globaleconomicanalysis.blogspot.com

To: russwinter who wrote (28501)	3/13/2005 11:02:49 AM
From: gregor_us	Read Replies (2) \| Respond to of 110194

Russ--Bernanke States That the Trade Deficit is the Result of excess global savings returning to us as a giant backwash, when I think you and I would agree its really just gargantuan liquidity, provided by the US and Japan--sloshing throughout the globe. Meanwhile, Economics Professor Antal Fekete with his many questionable and curious ideas, sees the money-slosh as one that essentially, and eventually, sets up between the shores of Bonds, and Commodities.(1) Even if the Fed, as you say, now moves to turn the Liquidity Supertanker around (no, this is not your Abby Joseph Cohen's "Supertanker" <g>), wasn't Wednesday's through Friday "Bond Event", combined with this week's commodity moves (CRB breaches the high of 24 years ago), suggestive that the shift towards commodites lies ahead of us? Doesn't Greenspan first have to learn how to steer the Supertanker he himself has launched? I remain baffled at the thought he can turn this around quickly. Finally, I view a weakening dollar as the opposite of "tight money"--conditions which spread themselves across the globe. PS: I read the Adler and enjoyed it--but I feel the focus is too US-centric if trying to get a handle on Global Liquidity. There is also another quote by Fekete included here that I think you may enjoy, and points towards the current discussion of speculation vs supply/demand. (2) LP 1. I define inflationary spiral under the Kondratiev cycle as the decades-long rise of prices and interest rates, and deflationary spiral as their similarly long fall. Interest rates may lead and prices may lag, or the other way round. The important thing is the linkage. Prices and interest rates are inevitably linked. Linkage epitomizes a huge oscillating money-flow back-and-forth between the bond and the commodity market. When the money-tide begins to flow at the commodity market and ebb at the bond market, we have the inflationary spiral. When the tide is reversed and it flows at the bond and ebbs at the commodity market, we have the deflationary spiral. 2.However, supply/demand is nothing but a figment of the imagination unless it includes speculative supply/demand which, rightly or wrongly, also participates in the price-discovery process. Speculators have no firm commitment to the long or the short side of the market. They may change sides at the drop of the hat, sometimes rationally, at other times not so rationally. Moreover, speculators can sell short, that is, sell commodities that they haven’t got, nor do they know how they are going to get. Their motto is “sell now, worry later”. The point is that speculation is capricious. Therefore the notion of supply/demand does not stand up to scientific scrutiny. It is an antiseptic concept having validity only in an environment free of the virus of speculation. financialsense.com