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 : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (50402)	5/2/2006 12:06:17 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

I see no reason to change my scenario. Housing is busting, wages are stagnant, but jobs are still holding up. Things take longer to play out than anyone thinks. Will consumer spending (71% of US GDP) hold up if jobs go in the toilet? Can jobs hold up without housing? Mish

To: John Vosilla who wrote (50402)	5/2/2006 1:26:02 PM
From: regli	Respond to of 116555

I am not hung up on the terms inflation or deflation. My view is that we are still in a period where purchasing power of the average person will likely be lost in the U.S. and likely also in Europe and Japan. A falling dollar should increase nominal prices for most imported goods even if the rest of the world were to enter deflation. Wealth protection has to be measured in international terms and therefore needs to be measured against as hard a currency as possible. Many people argue that commodities are presently overvalued because of abundant liquidity. I personally believe that the abundant liquidity reflects worldwide money printing that is, with a delay, now reflecting itself in the price of real goods. It is no surprise to me that once the illusion of the "New Economy" crashed and burned that the old relic found its footing again. In the end we needed tangibles to increase the standard of living of lots of people in the world and eventually 1s and 0s are not going to be accepted as currency forever as 1s and 0s can be created at will and at an ever faster rate. Also, the term liquidity withdrawal is simply an attempt at slowing the increase of money creation. Even assuming that the CBs are still in control, few will protest “liquidity withdrawal” as long as the economy is still growing. The real test will be once things slow down. As I view any public policy, and here I include the Fed, within a political framework, I have little doubt that politics will trump all rational but unpleasant decisions. Even for very competent and courageous people this is an extremely challenging environment and I consider it unlikely that anybody can land this financial plane safely at this point. We seem to be unable to even come to terms with the rapidly deteriorating environment, something that threatens our very survival in the most direct sense. If ideology trumps such a clear threat then what does it take to address something as nebulous as the deterioration of the financial system. On the environment there is just about a unanimous consensus by experts, I haven't seen anything like it on the financial front.