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

To: shades who wrote (68005)	8/10/2006 6:46:44 PM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

You never answer me Jay when I ask you about canadian lumberer - when labor is your biggest cost - how does a paid canadian lumberer with benefits and safety standards compete with free mexican laborer who dies every so often but is OK cause 50 mexicans behind him willing to take his job? In prescott bush's day - how could a paid coal worker with safety standard compete with auschwitz worker who worked for free digging coal and if he died 50 more behind him to pick up the work? What is to stop US prisons from putting huge black or mexican prison population to work for FREE in coal mines or cutting trees? Make me understand how canadian lumberer competes with that? Shades, this is the precise reason why recessions leads to economic depression!! As I've been saying, even if PPI falls, CPI falls even more!! i.e salaries (PPI) might not fall much but people will buy only if lumber is sold (CPI) lot cheaper. After UK filed for bankruptcy, Thatcher allowed huge immigration and this forced the salaries down in UK and hence the PPI fell large enough reviving the economy and credit cycle. Right now, US has already taken advantage of the Mexican immigrants and Chinese and this was part of the dis-inflation. I dont think there is any more trick Fed/US Govt can pull to lower the inflation. I dont think even Mexicans will lower their salaries when 1) USD falls against pesos 2)Cost of living for Mexicans soars in US 3)Cost of doing business (for employers) soars irrespective of Mexican employees. I dont think Mexican, Chinese salaries are going to fall. Another "Aushwitz" in US? It is possible though.

To: shades who wrote (68005)	8/10/2006 8:12:01 PM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

I see oil and gold down today - maybe people don't NEED those things as bad as the snake oil salesman convinced them they did. Bernanke has said 2% inflation as policy - did I miss something? I see numbers saying money growth is higher than zero. Bernanke is going to goose inflation to an extent even "Slaves" cant bring down the cost of production!! Message 22708283 But, Fed will never allow hyperinflation or even inflation running above 7%. My position is that, it is this inflation (say 7%) that will prevent the Fed from lowering interest rates when banks start failing!! This was the situation in 1931 in US, in 1991 in Japan. That is why we will have systemic risk (and we will never reach hyperinflation stage). I don't see that - I see prices not moving much and inventory levels rising. What happened in UK when interest rates were lowered last year? Prices appreciated 7%!! Now, Fed is holding the interest rates steady at 5.25 well below inflation. This negative real interest rate will feed into the markets providing "some" jobs and thus maintaining home prices for some time -- Let's see how it works out. Yet I know people that are paid/subsidized by the gubbment NOT TO GROW corn. Do you think this will still be the case going forward? Now that there is so much demand from Ethanol manufacturers. In California, LA pays farmers not to farm so that the water can be used for the city gardening!! I thought people where posting SOMA/TOMO charts and the like? Bernanke has said a problem with the depression they didn't loosen fast enough - tightened too long and too far - well I think he has just shown he is willing to stop turning the nut eh? Fed has been quite so far because FCBs have been doing good job. That does NOT mean Fed will do it in the future. The deflation/depression is nothing but an event when Fed says "Sorry, I cant lower rates anymore". I understand Bernanke blames depression on Fed because they did not lower interest rates for 2 years (until 1933 after raising rates in 1931. Although Bernanke foolishly talks about rising interest rates in 1928). How come, reducing after 1 year make so much difference? I guess it could, but as I said, systemic risk happens because wall street thinks Fed will lower rates when they run into trouble and hence they are heavily loading up on risks. If they dont, their peers will! If Fed fails to back them up even for 3 months credit should be unwinding the Greenspan Put will not trusted right? However, if Fed winks to WallStreet, then the interest rates have to go lot higher to avoid job losses. In 1932, Congressman might have paid the foreigners. Not this time!! The credit default has to result in dollar losing its hegemony.