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

To: Crimson Ghost who wrote (29819)	4/1/2005 7:45:34 AM
From: shades	Read Replies (1) \| Respond to of 110194

Wither the savers? project-syndicate.org In Search of Global Demand by J. Bradford DeLong ....Un-wedging America without a crisis – attaining the economists’ grail of a “soft landing” – requires that a great many people and institutions with enormous holdings of dollar-denominated assets passively stand by and take no action while those dollar-denominated assets lose a third or more of their value against other currencies. There is a recent precedent for this: from 1985 to 1987, holders of dollar-denominated assets took a similar, but much smaller, bath. But can you step into the same river twice? Moreover, achieving a successful soft landing requires more than that holders of dollar-denominated assets be tranquilized into catatonia while they lose their shirts. It also requires that at least eight million American workers who are now employed in construction, consumer services, and related industries find new jobs in export and import-competing industries. Message 20975651 No one takes Bolshevism seriously any more. But unseriously, comically, almost accidentally, it has taken over most of the world - including the United States. The cost of paying retirements has been collectivized. health care has been largely collectivized - both by government force and by the insurance industry. Risk of all sorts - including financial risk - have been spread out so much, no one knows exactly how far they reach. If a man defaults on his mortgage in San Diego, who will be the ultimate loser? It is hard to know. Risk is collectivized. And modern corporations are hardly the exploiters and despoilers of Marxist imagination. Au contraire, public companies are now owned by 'the people' - through millions of small shareholdings and mutual funds. And they are managed in such a way that almost guarantees that the capitalists will never make money. Dividend yields are below 2% - while the inflation rate is 3.3%. Investors take on the dividend...even though it represents (assuming the share price remains constant) a net annual loss of 1.3%. The capitalists no longer exploit the proletariat, in other words. Instead, the workers exploit the little capitalists.

To: Crimson Ghost who wrote (29819)	4/1/2005 5:32:21 PM
From: Jim McMannis	Respond to of 110194

Bingo!

To: Crimson Ghost who wrote (29819)	4/1/2005 11:51:50 PM
From: teevee	Read Replies (1) \| Respond to of 110194

High interest rates bad for everyone? How about savers? It depends;-) A recent economic "red flag" I have noticed is that private banking groups are now paying up to 10 and 11 times cash flow for private companies, hoping to take them public within a short period of time and for a profit by capturing the spread on public company share price to cash flow multiples. This kind of "buy wholesale-sell retail" strategy and activity only transfers wealth-it does not create new wealth. As long as there is an appetite for IPO's, higher rates will do little to stop this kind of speculative activity.

To: Crimson Ghost who wrote (29819)	4/2/2005 3:31:53 PM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

How about the fact that without higher rates bubbles (real estate especially) will continue to expand from already extremely dangerous levels. Perhaps Greenspan's conundrum on steroids? What to do now after this great misallocation of capital and transfer of wealth to real estate owners in the bubble markets? So many critical industries seem to be rolling over even though monetary policy is still accomodative and the yield curve has a ways to go before it gets flat. Somehow I doubt the coastal bubble gets popped until the end of 1% start pay rates and no money down. That won't end until credit losses skyrocket (already starting in the midwest), the long end is much higher (perhaps another 200 basis points on 10 yr) or the yield curve inverts.