Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: GST who wrote (50901)	1/23/2006 10:48:55 AM
From: pogohere	Read Replies (1) \| Respond to of 110194

" . . .merely looking at the Fed and US money supply will leave you hopelessly uninformed about the prospects for inflation or deflation:" Who is proposing to do "merely" this? "Can you understand persistent changes in prices merely by looking at money supply in the US?" Who is proposing to do "merely" this?

To: GST who wrote (50901)	1/23/2006 12:34:28 PM
From: mishedlo	Read Replies (3) \| Respond to of 110194

Can you understand persistent changes in prices merely by looking at money supply in the US? -- no chance in hell. Can you understand prices by looking merely at the US$? No chance in hell. Home prices in the US skyrocketed in 2004 while the bottom fell out of the US$. My model explained it all very very nicely, and in fact even predicted it. Your model based solely on the US$ certainly did not predict it or even explain it. Instead it looks at the result after the fact and simply concludes there is a bubble in the US$. It ignores the cause was a bubble in credit! It should be obvious to ANYONE that a bubble in credit caused this echo boom in housing. I have no doubt that Russ would agree with that statement. It should be equally obvious that the Naz bubble was fueled by credit and money supply growth that worked its way much more so into the stock market than it did prices. Again, my views allow for that. And again, I bet Russ would agree with that statement. Finally there was a collapse in credit and a rise in the demand for money and a rise in bankruptcies in the dot com bubble burst. A destruction in credit explains the drop nicely. Again I would bet Russ agress with that general idea. A destruction in credit explains the housing bust in Japan. I hardly need to look at anything else. An expansion in credit fueled a property bubble and a contraction in credit fueled a housing bust. Nice and neat! Prices? Who cares. I guess your model suggests there was no deflation in Japan because the CPI barely moved. Of course that is totally preposterous. I am the one looking at a multitude of variables rather than getting stuck on a single idea there is some sort of dollar bubble. Furthermore, whatever US$ bubble there is has its roots in easy credit and monetary printing and US consumers living beyond their means BORROWING to consume (ie CREDIT). One must understand cause and effect. It is that borowing to consume that has weakened the US$ and that spending WILL be curtailed simply because consumers can not and will not keep spending more than they make forever. If they do they will be wiped out in bankruptcies (and we are seeing rising bankruptcies right now). My model handles this very nicely and once again predicts rising bankruptcies and rising foreclosures. It is happenening as we speak. It predicts a housing bust and that seems to be happening as well. I take into account, that productivity improvents can mask TRUE inflation (defined as an increase in money supply and credit). I also take into account that money supply increases may go into stocks or gold or other things that do not affect the CPI. That of course is why focusing on prices instead of money supply has it ass backwards and that my friend holds true whether or not we are under a gold standard or a bloated fiat regime like we are now. So no, I am not stuck on some simple gold standard view of things either as you incorrectly suggest. You seem to have a simple model: The US$ is in a bubble so prices must go up. Whose model has done a far better job at describing and even predicting what has and is taking place? Mish

To: GST who wrote (50901)	1/23/2006 1:06:45 PM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

GST, How about answering this simple logic. Let's say, 1 USD fell to 0.5 Euro, then to 0.25 Euro, then to 0.1 Euro and so on. If your argument is that, yes it will fall at that rate in an hour or a second, then I dont want to continue this argument with you. Assuming, you atleast believe that it will fall over a year, 5 year - then I've this argument for you: As the USD falls, inflation (My belief is only PPI will go up - however, for argument purpose, let's assume CPI also goes up) goes up. Now, do you think interest rates will still be 5%? I'm assuming, you are not that stupid to assume, FEd will not fight high inflation but will only fight deflation. If you believe, even under high inflation (not hyper inflation) Fed wont increase the interest rates, then there is no firther argument either. I believe Fed will increase interest rate. Say, it goes to 20%. Do you still think USD will fall against Euro if Euro interest rate is 3%? You think interest rate differential dont matter? What if Fed offers 100% interest rate? 1000%? At point will your logic concede?

To: GST who wrote (50901)	1/24/2006 9:17:42 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

UK Jan manufacturing order books worst since Aug 2005 - CBI UPDATE Tuesday, January 24, 2006 11:47:48 AM afxpress.com (Updating with more detail on quarterly survey) LONDON (AFX) - The hoped for improvement in the UK manufacturing sector failed to materialise in January with order books falling back to lows not seen since the summer of 2005, a leading business lobby group said today In its industrial trends survey, the Confederation of British Industry said that 42 pct of firms reported lower than normal order books while 14 pct reported higher orders. The resulting net balance of -28 pct compares with -22 pct the previous months and expectations of an improvement to -20 pct pct The latest reading is also the weakest since August last year Not all the news was bad, however, with export orders improving sharply A total of 33 pct of firms said export orders were below normal while 23 pct said they were above normal, resulting in a net balance of -10 pct in January. In December the net balance was at -23 pct. The latest reading is the best since August 2004 Additionally, the output balance improved to -1 pct from -4 pct in December. Manufacturers also expect domestic price pressures to rise over the coming three months, with a net balance of 12 pct of manufacturers predicting gains in the January survey compared with zero in the previous poll From a quarterly point of view, the CBI reported that 25,000 jobs were lost in the last quarter as employers sought to offset the profit squeeze faced by the sector Over the past 12 months, the total number of jobs lost in the sector was 106,000 At the same time, price pressures continued to accelerate with a net balance of 23 pct of manufacturers reporting an increase compared with 20 pct in the previous quarter and 13 pct before that But manufacturers were unable to pass this on as weak demand kept prices flat and squeezed already tight profit margins further. Demand was weakest in the home market with a net balance of -15 pct of firms recording a quarter-on-quarter reduction in domestic orders Manufacturing output in the three months to January was also down, with a balance of -6 pct of firms indicating that it was lower than in the previous three months -- the fourth successive quarterly decrease "Conditions for manufacturers are getting increasingly tough as costs continue their seemingly inexorable rise but weak demand keeps prices down, squeezing already thin profit margins even further," Ian McCafferty, CBI chief economic adviser said "Economic growth remains below par, partly because of the slowdown in consumer spending, and this has continued to hit manufacturers' domestic order books although exports are slightly more healthy. Investment intentions are also very weak and what is clear from the survey is that manufacturers have very little cause for optimism," he added