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

To: Wyätt Gwyön who wrote (53949)	2/15/2006 5:52:17 PM
From: NOW	Respond to of 110194

not sure why you maintain the eefects have been and will be marginal?

To: Wyätt Gwyön who wrote (53949)	2/15/2006 7:04:28 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

so, i think the housing bubble is marginally inflationary, and its popping should be marginally deflationary. i was very intrigued by Elroy's comment about China supposedly having 10-15 years capacity of factories, housing, etc. if that is true, then we could have a synchronized deflationary tsunami from the China contraction and the US contraction. i'm not knowledgeable enough on China to know if what EJ is saying is true. hmmm, a global depression--how could you have it without both the US and China being the main parties?--that would be a very interesting investing environment. Greg, it is not so much the popping of the bubble that is deflationary it is all of the things associated with it. In fact, prices do not have to fall at all to have a horrid outcome. Assume for a second that we have stubborn sellers that refuse to accept lower prices. Assume also as is the current trend we have reluctant buyers. Prices drop little BUT.... Look at all the activity that grinds to a halt Buying appliances Buying carpet Grass seed Toilets Trucking all that stuff New restuarants going up around new sub-divisions that are not built etc etc etc You get the idea I am sure. Now what does that do to the incomes of truckers, brick layers, carpenters, plumbers, sodders, etc? What does that do to the expansion of jobs in general. It simply does not take a PRICE decline to snowball. All it takes is a drop in activity. Now..... With that drop in activity, what eventually must happen to prices? This is a chicken and egg kind of thing except in this case, it does not matter which comes first. Mish