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

To: TimbaBear who wrote (44673)	1/17/2006 10:49:54 PM
From: mishedlo	Respond to of 116555

My argument is indeed not flawless. Rising wages and rising numbers of jobs are what will defeat it. Then agian I have admitted that all along as part of my debate. I see neither coming. The fact that housing blasted off in spite of it and more debt was piled on is a factor in favor OF not against deflation. I am in fact consistent on this point. You can go back in any of my blogs. The FED slashing rates to 1% fueling a mammoth credit expansion was only temporarily inflationary. I doubt it can be done again for reasons I have cited. Housing has turned down and credit standards have tightened and I will add another one if I can "the pool of stupid buyers" has been depleted. Not only will we see the pool of stupid buyers exhausted the pool of stupid lenders will head down as well. Mish

To: TimbaBear who wrote (44673)	1/17/2006 10:52:31 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

You say there is a huge difference at the turn and I say: "Prove it!" Who's to say Bernanke doesn't come in and cut rates several times at 50bp per shot? How long would it take to crank the mania right back up? That is impossible to prove. We can only see what he does and what the result is. I do not believe the mania in housing can be reignited. No one can prove it either way except history. Mish

To: TimbaBear who wrote (44673)	1/18/2006 1:42:01 AM
From: John Vosilla	Respond to of 116555

Great article in The Economist this week on that point. This cycle inflation went into assets/property instead of goods due to globalization and trade imbalance artificially keeping long rates down. Real rates perhaps still negative if CPI was measured correctly End result: overvalued assets = too low return = too high risk on a global scale

To: TimbaBear who wrote (44673)	1/21/2006 11:16:10 PM
From: Fiscally Conservative	Read Replies (3) \| Respond to of 116555

Timba You wrote: " Who's to say Bernanke doesn't come in and cut rates several times at 50bp per shot? How long would it take to crank the mania right back up?" Interesting point. Many believe on the street that it is not a matter of 'if' but 'when' the Fed begins to cut rates again. Certainly it can be assumed that if this were to be the case Bernanke will be at the helm when it all begins again. Certainly not how I feel. Question for you: Do you think 9/11 played any role in our Fed's policy making these past years hence? Certainly,our President acted in a manner he deem appropriate and with a majority support of our Congressional body. Had this not happened,9/11 that is,I wonder if this fiscal picture would not have been entirely different today.