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

To: mishedlo who wrote (65268)	7/5/2006 10:47:43 AM
From: ild	Respond to of 110194

Global: Anti-Macro: China's Great Contradiction -- Part II Stephen Roach (New York) morganstanley.com

To: mishedlo who wrote (65268)	7/5/2006 11:28:42 AM
From: gregor_us	Read Replies (2) \| Respond to of 110194

Alan Sinai Says Inflation is About to Break out Big Time. I'm not sure what to think of this guy. His forecasts so far have been on the mark. But the following quote from Sinai gets my attention: "For understanding the real world, the science of economics is a wonderful lever," he says. Yet another in a long line of Economists, who are under the mistaken notion that Economics is a Science? One wonders. As usual, I have to ask whether Economists as a group have any skills in understanding human behavior--which is what Economics properly covers. Sinai Tops Economy Forecasters With Aggressive Inflation View By MARK WHITEHOUSE July 5, 2006; Page A6 In recent months, U.S. consumers and investors alike have suffered unpleasant surprises as prices on everything from gasoline to apartment rents have jumped. But the worst may be yet to come, says the top-ranked economist in The Wall Street Journal's latest forecasting survey. For several years, Allen Sinai, chief global economist at Boston-based consulting firm Decision Economics, has argued that the current expansion -- with global demand pushing up oil prices -- looks a lot more like the classic business cycles of the 1970s and 1980s than the exceptional one of the 1990s, when various factors -- from globalization to smaller government deficits -- helped keep inflation in check. In the Journal's December survey, that conviction led Mr. Sinai to forecast that consumer prices would rise sharply in the first half of 2006 and wind up 3.5% higher in May 2006 than a year earlier. The actual year-over-year inflation number hit 4.2% as of May, higher than any of the 56 economists in the December survey had imagined, making Mr. Sinai's aggressive forecast among the most accurate. "Inflation sneaks up on you like a cancer," says Mr. Sinai. "When you begin to see signs of it, it's already in the system and in motion." His guess that the bond market would react to higher inflation by pushing the yield on the 10-year Treasury note up to 5.14% by June 30 -- the actual number was 5.15% -- clinched him the No. 1 spot. [Allen Sinai] Now, Mr. Sinai thinks inflation likely will begin to feed on itself, as workers and suppliers demand higher wages and input prices and companies pass those cost increases on to consumers. As a result, he expects the Federal Reserve to slam harder on the brakes, increasing its target for short-term interest rates from the current 5.25% to 6.25% by mid-2007, a level that no other economists think likely and that many believe would be high enough to trigger a recession. Mr. Sinai, however, says not to worry. He thinks higher interest rates won't seriously crimp companies' ability to get funds for investment, allowing the economy to expand well into the election year of 2008. "All things considered, the U.S. and global economies are doing quite well," he says. He expects growth in U.S. real gross domestic product, the most widely followed measure of economic activity, to average almost 3% in the second half of 2006 and about 2.7% in the first half of 2007, near the consensus. Inflation and GDP growth proved the two toughest targets to hit among forecasters who participated in the December survey and consequently became the most important factors in the rankings. A high estimate of first-quarter GDP growth -- 4.7% compared with an actual 5.6% -- won second place for Gene Huang, chief economist at FedEx Corp. Maria Fiorini Ramirez of the eponymous consulting firm, Peter Hooper and Joseph LaVorgna of Deutsche Bank Securities and Mickey Levy of Bank of America Corp. made the top five largely by getting in the ballpark on inflation and GDP. [Top Honors] Conversely, Mike Cosgrove of Econoclast, Lawrence Kudlow of Kudlow & Co., Gail Fosler of the Conference Board and Robert DiClemente of Citigroup Inc. missed the ballpark on one or the other, putting them in the bottom five. University of North Carolina finance professor James Smith, who took last place with a prediction that oil and consumer prices would drop, remained undaunted. "I'm sticking to my guns," he says." Being a native Texan, I've studied and seen these oil gyrations all my life." Mr. Sinai has seen many a business cycle as a professional economist. He earned his doctorate from Northwestern University in 1969, and in 1971 he joined Harvard economist Otto Eckstein at consulting firm Data Resources, Inc., one of the pioneers in applying complex computer models to the business of forecasting. Mr. Sinai originally planned to become a medical doctor but says he ultimately found the quantitative nature of economics more attractive. "For understanding the real world, the science of economics is a wonderful lever," he says.

To: mishedlo who wrote (65268)	7/5/2006 8:33:09 PM
From: Claude Cormier	Read Replies (1) \| Respond to of 110194

Aren't you not listing one of the most important difference between now and then. Now the world is sinking under a sea of US dollars. Back then, the were few foreign CB's with dollars. And part of those dollars were exchanged against gold before the window closed. SO the 70's started with few greenbacks abroad, if I am not mistaking. Now many CB's are on record to have already started to exchange their USD for gold again. And other CB's have announced such plans. And this time they have a lot more USD.