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

To: Claude Cormier who wrote (50350)	1/20/2006 1:44:15 AM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

"He who can predict exactly the outcome of this mess is a genious." Nice to see someone being honest and leaving the ego at the door. Also some great dialogue between Mish, GST and Heinz. I didn't see much discussion of the passing along of real increase in costs associated with the real inflation people are experiencing much of this decade. You know the gas, insurance, RE taxes, food, utilities, medical, costs of building infrastructure ect.. up 40-50% in the real world since 2001.. Just because RE prices go down 30% in your area and unemployment goes to 10% doesn't mean nondiscretionary items you need for survival in the modern world that can't be imported from China will plunge.. Sounds more and more to me like we are in a 1970's stagflation on steroids mixed in with a rolling depression hitting different industries, asset classes and geographic areas at different times but never at one time like the 1930's?

To: Claude Cormier who wrote (50350)	1/20/2006 1:51:41 AM
From: Little Joe	Respond to of 110194

Claude: Couldn't agree more, except that it seems sure it will not turn out well. Little joe

To: Claude Cormier who wrote (50350)	1/20/2006 10:46:21 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

He who can predict exactly the outcome of this mess is a genious. Predicting the outcome is trivial. Predicting the timing and order correctly is what will make someone a genius. I fully expect to see massive inflation again sometime So inflationists will be right There will be deflation again so those people will eventually correct too. Some here (but not all) see deflation coming but only after a huge spike in interest rates, mammoth inflation, and some sort of credit event that causes it all to blow up Some think that deflation is simply impossible. Those that say that will eventually be proven wrong. But when is eventually? The ones that are correct (for now) ar those that just say ho-hum nothing is happening and nothing will happen. They look pretty good in comparison to everyone else predicting disaster one way or another. No, predictions are easy timing them is what is hard. Mish

To: Claude Cormier who wrote (50350)	1/20/2006 10:54:10 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

But a complete scenario must also include the possibility that Bernanke brings his helicopter speach into reality hoping that he (they) can control the game and maintain the system. As an example, 2 millions canadians or so received this morning an automatic deposit of $125 in their bank account, simply to compensate them for a recent increase in heating oil. This is a small amount, but nothing could have stop them to send a lot more for whatever just cause. I accounted for that in my scenario. Such actions will stop when they greatly hurt creditors. True, hyperinflation is easy to accomplish. I suspect we may see it again AFTER consumer debts are purged away in bankruptcies. When primarily the government owes, especially to foreign governments, it will certainly inflate it away. The problem of course is consumer debt is NOW a far bigger problem. Banks and the FED will not want to bail out consumers at the expense of themselves and corporations. That should be logical IMO, and that is why I discount the helecopter drop. The other problem is that hyperinflation more or less ends the game. Deflation allows the game to continue. For now it is logical to discount the helicopter drop. When we get to the point of Weimar - where US govt debt is a far far bigger problem than consumer debt then we can put hyperinflation back on the table. There is a huge purge of consumer and corporate overexpansion that logically needs to be purged first. Mish