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

To: valueminded who wrote (37069)	9/13/2005 9:04:28 PM
From: SouthFloridaGuy	Respond to of 116555

You are right in that a slower economy doesn't have to be deflationary. However, a slower, debt-laden economy could very well be. With regard to the propensity to create money. The creation money is more related to credit expansion rather than actual monetary creation by the Fed. I think the Airline companies are analogous in some ways to the average J6P American consumer. Even at a record low rates and credit spreads, these companies could not exist because of too much debt and an external "shock", which while hurt its non-debt laden peers, does not bankrupt them and will allow them to take advantage. --High levels of competition keep prices down (global labor arbitrage). --Increasing amounts of debt required to sustain operations (SUV lifestyle) --Missed Payments due to striking workers (unforseen expenses) and fuel prices (well, same for the American consumer on that front). --Bankruptcy which leads to Firesale of Terminal Slots, shedding of workers, etc. (home repo's)