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

To: UncleBigs who wrote (49500)	1/11/2006 8:27:02 PM
From: patron_anejo_por_favor	Respond to of 110194

>>Today, I see Americans collectively at a risk level never before seen in our nations history. It's as if the entire country has gone "all-in" on a risky bet.<< The no-limit poker craze is a perfect symbol of Russ's mythical "riskloves". No one loves risk more than some of the demented fools who play that game, to be sure.......it was no coincidence IMHO that about half of the final table in last years WSOP were in the mortgage or residential real estate speculating business. Only a sucka works at a real job anymore.......this country NEEDS a bubble collapse in the worst way.<NG>

To: UncleBigs who wrote (49500)	1/11/2006 9:36:58 PM
From: mishedlo	Respond to of 110194

Energy Crisis & the Politics of Oil globaleconomicanalysis.blogspot.com Mish

To: UncleBigs who wrote (49500)	1/12/2006 3:31:06 AM
From: Mike Johnston	Read Replies (2) \| Respond to of 110194

Today, I see Americans collectively at a risk level never before seen in our nations history. It's as if the entire country has gone "all-in" on a risky bet. At best I see a long drawn out deflationary contraction over a period of years. At worst, this unwind has a potential to be catastrophic in terms of cascading events (hedge fund blowups, pension blowups, etc.). You are correct, that is why the Fed will monetize the blowups leading to hyperinflation. All the arguments for deflation are correct but the problem is they assume we operate in a free market economy. What would happen in 1980 and beyond if Volcker would not only fail to raise rates to upper teens as he did, but instead lowered them increasing money supply and at the same time the government would deny the existence of inflation ? Deflationary collapse has been and is happening under the surface but is being covered up by the Fed's printing press. JP Morgan and other banks have been bailed out from Enron, Worldcom, telecom debt and Argentina losses by the steep yield curve and possibly even a secret Fed bailout , because back in 2002 JP Morgan has turned around from the verge of collapse into a healthy state in a matter of weeks. What would happen to the economy if housing drops by 50-70% or more, the stock market drops by 50% or more and 10Yr treasury yield rises to 10% or more, all those things would certainly happen if free market forces were allowed to work ? Here are a few things that would happen: -25% unemployment rate - tens of millions of foreclosures - collapse of many pension systems - collapse of majority of banks and financial institutions - collapse of GSE's - collapse in tax receipts leading to the default on federal debt - state and local government debt default - tens of thousands of business failures That is why the Fed has painted itself into a corner and i think they will fight to the end and monetize, then destroy the currency in the process and those things will happen anyway but later.