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

To: bond_bubble who wrote (48179)	12/25/2005 5:00:43 PM
From: arun gera	Read Replies (1) \| Respond to of 110194

>One more final scary thought: In the early 90s, everyone was scared that Japan is going to overtake US - because they are "HIGH TECH". Looking back, all their high techs were phones and entertainment systems!! Just simple gadgets - nothing to be scared of!!> Consumer goods were just the market the Japanese were attacking. Behind the scenes, the Japanese have moved ahead in manufacturing and material science fields. They are now closely followed by South Korea, and Taiwan. The Japanese have become competitive in making cars and electronics. Unfortunately for them, US moved ahead in computer software, networking, and the internet. The US companies that have moved to the new fields have cornered most of the profit, but the traditional high tech manufacturing - flat panel displays for example- are dominated by the Japanese. The mid-west is already reeling under the steady impact of the Japanese and Koreans for the last 20 years. -Arun

To: bond_bubble who wrote (48179)	12/26/2005 8:27:50 AM
From: el_gaviero	Read Replies (1) \| Respond to of 110194

Good post, bond bubble --- in fact one of the most coherent accounts I have read concerning how the current monetary regime will unwind. I don't know if you are right, but what you say seems plausible to me. If I understand you correctly, you are saying that in a money regime where a great deal of money creation does not produce a rising PPI, a slowing down of money creation might in fact do the trick --- that is, cause the PPI to start rising. This would seem to imply that we get a very particular type of resolution to the Great Deflation-Inflation Debate. We have had for quite some time now inflation with falling prices (at least at the level of industrial production). We will get in the future deflation with rising prices (at least for us in the USA at the level of industrial production). So how are you playing it, Bond Bubble?

To: bond_bubble who wrote (48179)	12/26/2005 12:45:50 PM
From: ild	Read Replies (3) \| Respond to of 110194

BB, very good post. <<<The only other way is to spend the USD savings they are currently holding!! i.e the foreigners spend the dollar more acquiring raw materials like OIL>>> As I understand the ONLY way for foreigners to spend their USD savings is to buy some the US produced stuff or services. China already tried to buy Unocal and was refused. Using USD to buy stuff from other countries just moves hot potato USDs to another country. What that means is that China and Japan will in fact lose the capital they invested in US treasuries. Small countries will be able to dump their US holdings while China and Japan are trying to support the USD to sustain their export to the US. But, as you said, the USD will eventually fall and the foreigners will lose their capital invested in the US treasuries.