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

To: GraceZ who wrote (51827)	1/27/2006 6:28:01 PM
From: Mike Johnston	Read Replies (1) \| Respond to of 110194

I have bruises all over my body, because off attempts to short the bond market at one time or the other. Fortunately i am still alive. Bonds were an excellent investment in the 80's in the declining rate and inflation environment. High coupon combined with appreciation from dropping rates and declining inflation. Now, we have totally different situation. Low coupon and rising inflation. Low rates are still very much stimulative to inflation. Anybody holding bonds in the last couple of years, although their prices held steady, has experienced significant erosion in the purchasing power of their principal, I expect that to continue. After all, in 5 or 10 years one does not need very high levels of inflation to reduce the value of principal by 50%. Inflation right now is higher than it should be. And what happens if we get even higher levels of inflation as i expect ? Not pretty.

To: GraceZ who wrote (51827)	1/27/2006 6:36:03 PM
From: Mike Johnston	Read Replies (1) \| Respond to of 110194

And Newsday had this, "Real wages across Long Island fell during the past three years, leaving residents with declining incomes once they accounted for rising prices for everything from gasoline to health care to food." "In Nassau County, real average weekly wages fell 3.2 percent between the first quarter of 2002 and the first quarter of 2005, according to data collected from the regional Bureau of Labor Statistics and analyzed by Newsday. In Suffolk, the drop was 4.2 percent over the same period, while Queens saw a 3.7 percent decline." "The declines were widespread, in industries ranging from construction and manufacturing to leisure and hospitality and transportation. In Suffolk County, every industry saw wage declines except one. professional and business services, the data showed." thehousingbubble2.blogspot.com