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

To: suanny who wrote (56340)	3/21/2006 1:21:39 AM
From: mishedlo	Respond to of 110194

Also a guy on Financial Sense this weekend suggested that wage arbitrage would be neutralized by potectionism,causing higher prices in an otherwise deflationary situation ,would like to hear your thoughts on these Mish. Protectionism might initially give all the stagflationist theories a big boost, but it would be unstable and not last. If the Fed hikes into it to stave off "price inflation" it could cause a worldwide depression. That is how I see it now. I do not think it comes down to that but one should not underestimate this Congress or this president. Mish

To: suanny who wrote (56340)	3/21/2006 11:55:49 AM
From: John Vosilla	Respond to of 110194

Protectionism, debasement of currency, devaluation of the federal debt, narrowing the trade deficit all seem to come into play. And bankers getting paid either by a devaluation of the future stream of cash flows or a cramdown in a debt liquidation worse than the RTC day. Which path to you think the powers at be at the controls would chose? My guess is they attempt to keep a flat yield curve like this for several years to come and avoid the end game. If housing cracks in a big way or stock market crashes they have plenty of room to ease creating even more inflationary pressures down the road. Has cash been king for you the last 3-4 years? I know of many people living simple lives who would be so far behind the eight ball now without the appreciation in the homes with low fixed mortgage payments that at least gives them the sense they are getting ahead while their monthly living expenses have skyrocketed and incomes flat to down. Every indicator seems to point to inflating our way out of this mess as the end game. What would derail this is a sharp and fast backup in long term rates which would collapse bubble housing and the stock market in a way far greater than the 73-74 collapse.. That could be what causes the debt liquidation, deflationary cycle so often talked about here. The fed will do everything in their power to keep the long end from any quick rise in rates even if it takes us into a recession IMHO. Nice post. Hope to see more of you here..