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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 (66794)	7/25/2006 2:48:24 AM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

Great Article on PPI greater than CPI theory causing job losses and recession (from Austrian perspective) and why consumer spending is not as big as intermediate stages of production. Also, he points out manufacturing recession is a leading indicator than consumer spending for the recession: safehaven.com The importance of the above is vital if we are to understand what is happening at the moment (not just in the US but also in Australia) and why danger signals are overlooked. Despite evidence in 2000 that the capital goods industries in the US were cutting back, many commentators ignored this trend because consumer spending and retail sales were still holding up. So long as spending in these area was maintained or even increased, so it was reasoned, the economy was in no danger of sliding into recession. But as I have explained before, credit expansion stimulates the capital goods industries into expanding output beyond the point that is economically justified. By the time this has been discovered these companies find themselves squeezed between rising costs and falling demand. The result is that production has be cut and labour laid off. According to this line of reasoning falling production means that expenditure on intermediary goods must drop. In other words, business spending is falling. Now an initial fall in business spending need not register in GDP figures if consumer spending offsets it. This happens in two ways: 1. The factor payments that these companies have made are still working their way into consumer spending. 2. Consumer credit -- underpinned by credit expansion -- continues to sustain consumption. With consumer spending still growing, it's possible that employment in the consumer industries will still grow. This is what happened during the Clinton recession. Although production dropped consumer spending raced ahead.

To: mishedlo who wrote (66794)	7/26/2006 12:01:40 AM
From: shades	Read Replies (1) \| Respond to of 110194

Will there be another baby boomer boom to bale us out? I think not. You don't see the mexicans/latinos with babies I guess like I do - they are growing thier population here from my observations - when I go into walmart or the mall - white princess maybe has 1 kid if that - mexican/latino princess has 3-5 and pregnant again! especially if current deficit spending continues and there are fewer workers supporting each retiree. Very soon if the predictions here are right - there is going to be a TON of cheap housing in this country - immigrants the world over will flee thier oppression and poverty to come get some of this cheap housing - we are not Japan - they obviously are not the melting pot we are. Perhaps if thier numbers get high enough they will matter more to politicians than the incumbent citizens - they will be thankful for thier new standards of living perhaps and keep the current politicians in power while the incumbent citizens will matter less and less as a voting population. Outsourcing of manufacturing jobs that are replaced with jobs at Walmart can hardly be a good thing. I went to the seminole hardrock casino in tampa today - now this is just an anecdotal observation - but 2 years ago I remember mostly only native american indians working the food court and as janitors and lower class jobs like that - today I noticed lots of africans with heavy accents that have only been here a few years working those jobs - I guess even the native american indians have gotten too good to clean toilets and flip burgers. OK if China uses those dollars to buy oil, what does Saudi Arabia do with those US dollars? Richard Benson said the saud boys better keep funding us and buying our debt or we will use our military to shock and awe them and no longer support the ruling class in saudi arabia. mosler.org If you will go here Mish - Mike Norman is talking to Mosler a lot - Mosler is a smart guy with lots of connections.