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

To: THE ANT who wrote (47899)	12/21/2005 3:32:44 PM
From: ahhaha	Read Replies (2) \| Respond to of 110194

If you feel deflation is in our future why do you not see a bubble in housing? There never was a bubble. Only a needed price change to get the supply up. That's what markets do. When supply is low the price rises until new supply meets demand. The price had to rise quite a lot because the regulations put on home building were onerous and demographic changes plus growth in incomes forced and enabled the demand. Further, tendency to deflate yields lower long bond rates. A substantial drop in mortgage rate won't pump re prices though. The market is saturated. Deflation does not mean deflationary depression. It only means that one has to lower prices to garner greater revenues or share when dealing in scale environments. We can and will have a good economy within a regime of deflation. How does one see the deflation? How about in the prospects for large inefficient corporations like GM? How are you also seemingly positive on stocks? Because inflation is on its way out. With a good economy, and by good I mean inability to inflate, to falsify, to deceive, profitability will rise in the new and going efficient concerns. Obviously not all stocks will participate. A lot of them are left over dinosaurs which have been propped by the ability to inflate, and they will have to change or die by the hand of inexorable deflation.

To: THE ANT who wrote (47899)	12/21/2005 11:40:16 PM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

So thus we have deflation coming, housing goes through the roof, consumers up to their eyeballs in debt and all will be okay? Increased wealth generated by many as well as strong corporate balance sheets is a big plus and keeps me from being negative as many are here on the overall economy. However the coastal housing bubble along with excess credit by a certain segment of the population will result in a needed correction of some magnitude to adjust for the imbalances. Either there is inflation in which case rents go up, operating expenses of RE continue up, incomes go up, interest rates go up a lot and coastal housing collapses. Or there is deflation in which case rents go down, operating expenses are flat, incomes go down, interest rates go down a little, credit tightens and coastal housing collapses. The one in a million scenario is we enter a goldilocks economy for the next decade where we remain in lala land, fed fine tunes just perfectly, non of our foreign creditors call the loans due, inflation remains tame, economy continues humming along, wages increase at a fast but steady pace, the overextended consumer continues spending at a measured pace and the greatest bubbles of our lifetimes end up being a non event<g>