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

To: Tommaso who wrote (44023)	1/6/2006 5:15:13 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Tom, M1 comes the closest. It undercounts in general but does overcount one small item. It is a better way of looking at things but has serious flaws (related to sweeps). The best approach is Austrian Money supply figures but I am not a subscriber. "Real Money" from an Austrian perspective is actually negative for the year (2005) or so I was told. I suggest reading this article on Money Supply. Mystery of Money supply mises.org Real-World Economics An Interview with Frank Shostak mises.org You might also look at other things Shostak has written. Now just because I think that real money supply is what matters most, does not mean that credit is not important. Had not credit exploded we would not be in the mess we are in. I believe however but can not prove that a turndown in real money supply will lead to a drop (I believe a huge drop in credit). It is that purging of credit that will bring upon a deflationary collapse, even IF at some point "REAL money" supply stabalizes. That is what happened in Japan. Credit imploded in Japan for 60 straight months even as the BOJ was trying to pump money into the system. All the BOJ accomplished was a massive government debt. This is from an Austrian perspective and I think Heinz would agree with that. I can say that I have seen charts of Money AMS and they have done a far better job at calling recessions than any of the Mx series. Money AMS is now calling for a recession. I believe that recession will lead to a real purge in credit. MZM and other measures are fatally flawed because of double counting. Let me try it this way. Increases in "REAL Money" in the 1990's lead to massive increases in credit. HIGHLY inflationary. Prices however were masked by massive productivity improvemnet and falling commodity prices. So far I think you would agree with that. (I sure hope so). To fight off the Naz bubble bust "Mr Bubble" jacked up "REAL MONEY" once again as well as slashing rates to 1%. Again I bet you agree. That last blast fueled ENORMOUS speculation in housing and credit lending of all sorts. Again I think you are with me. Now, what happens if "real money" supply is tightening? What will that do to all the outstanding credit? What happens to that credit in rising bankruptcies? WE have been down this pasth before and this is the point at which disagreemnets start. But.... Most people are looking at growth in credit (yes it is still expanding but at a slow rate) thinking that is the future. The future will be determined by Money AMS which is now negative. Once that credit bust starts, due to the time lag on interest rate policy as well as the tendenncy of the FED to overshoot both directions, I believe we are going to have a massive purge in credit, that will continue even when the FED starts to loosen up a bit. It will continue because banks will see rising bankruptcies and defaluts on houses and pull in lending (credit ) horns. That is my view and of course only time can prove it. Mish

To: Tommaso who wrote (44023)	1/6/2006 6:18:32 PM
From: mishedlo	Respond to of 116555

U.S. Dec. payrolls rise 108,000; jobless rate falls to 4.9% Friday, January 6, 2006 1:45:15 PM afxpress.com WASHINGTON (AFX) - U.S. job growth slowed in December to 108,000 even as the unemployment rate fell to a cyclical low of 4.9%, the Labor Department said Friday. Growth in nonfarm payrolls was less than the 205,000 expected by economists, but upward revisions to prior months totaling 99,000 put total payrolls near the expected level of 134.5 million. Payrolls increased by 2 million in 2005. In December, average hourly wages increased 5 cents, or 0.3%, to $16.34. Average hourly earnings rose 3.1% in 2005. Total hours worked in the economy fell 0.2% in December as the average workweek dropped to 33.7 hours

To: Tommaso who wrote (44023)	1/6/2006 6:20:23 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Canada Dec unemployment 6.5 pct vs 6.4 in Nov Friday, January 6, 2006 1:12:43 PM afxpress.com MONTREAL (AFX) - Canada's unemployment rate rose slightly in December to 6.5 pct from 6.4 pct in November, which was its lowest level in 30 years, the national statistics institute said. [Does anyone really believe unemployment is higher in Canada than the US Maybe it is - Just asking] Mish

To: Tommaso who wrote (44023)	1/6/2006 6:22:12 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Japanese govt bonds end softer on caution ahead of US job data, 10-yr auction Friday, January 6, 2006 8:03:58 AM afxpress.com TOKYO (AFX) - Japanese government bond (JGB) prices ended the session lower as investors refrained from taking new positions ahead of US December employment data due out later today as well as next week's auction of 10-year JGBs, dealers said The yield on the lead 10-year bond was at 1.440 pct, up from 1.425 pct at yesterday's close. Yesterday, the yield declined briefly to 1.420 pct, its weakest level since Sept 27 The yield on the benchmark 20-year debt rose to 1.975 pct from 1.950 pct late yesterday, while the yield on the bellwether five-year bond increased to 0.800 pct from 0.790 pct previously. Bond prices move inversely to yields The price of the 10-year bond futures contract fell to 137.94 yen from 138.05 yen previously "Many investors are on the sidelines ahead of the US job data and 10-year debt auction next week," said Akitsugu Bando, a fixed-income strategist at Okasan Securities. The Ministry of Finance said it plans to raise 1.9 trln yen from the sale of 10-year bonds next Wednesday. Analysts said the market is looking closely for fresh clues from US data on the likely timing of any Fed decision to halt its credit tightening cycle. Mizuho Investors Securities senior strategist Osamu Tamada also noted that there was technical readjustment in the market today after bond prices had surged in thin trading yesterday.