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

To: kris b who wrote (53574)	2/12/2006 1:38:09 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

Will commodities (with world GDP going down 50%) resist the collapse.> Unless the global economy goes back to Stone Age economics (which I don't expect, or even 50% GDP drops, probably more like 10%), or there are large population depletions (avian flu?), there is a high degree of price inelasticity here. In the 20-30s, there was a great deal of overproduction in the US agricultural system and speculation in farms (one of the Bubbles then). Today you see resource companies slow to expand, and engaging more in financial dealings (stock buybacks, etc), rather than overproduction. I DO feel there is a speculative flucht in die sachwerte commodity trade that may be unwound in a rout, but it in no way has the extreme Bubble characteristic that financial assets do. <Today we have world labour arbitrage therefore this component will go down as much as anything else.> Not sure how you cut the wages of folks already making only $10-15 a day much, even in a Bust.