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

To: John Vosilla who wrote (68637)	8/22/2006 11:46:12 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

PITI? Mish

To: John Vosilla who wrote (68637)	8/23/2006 3:04:36 AM
From: bond_bubble	Respond to of 110194

I meant, inspite of house price crash, inflation will rage. This means that PPI grows faster than CPI. This will mean that unemployment will rise enormously if the govt attempts to inflate. So, if the unemployment increases - how can inflating the currency help in reducing the debt burden? Doesnt unemployment increase the burden of bearing the debt? Doesnt debt default ease the debt burden? BTW, if you think that Fed will buy the houses at $700K and support the house prices, wont all the condo guys start selling their condos at $700K to Fed - and after 6 months, they sell it again at higher price? Or, if Fed keeps the interest rate low at 5.25%, dont you think dollar will fall fast against commodities? Under that scenario, which foreigner will be willing to hold US Treasuries? Isnt it important that foreigners give up their commodities for the USTreasuries (i.e finance the trade deficit)? Which foreign commodity producer will be willing to buy and hold these treasuries as they loose their value against commodities? What happens to the PPI vs CPI in those commodity economies? In the past, China and Japan were the cause of huge trade deficit. Not anymore. Today, Japan announced their trade surplus fell again this month!! So, who is holding all the "trade surpluses"? All the commodity producers who NEED NOT be mercantilist like China!!

To: John Vosilla who wrote (68637)	8/23/2006 9:15:00 AM
From: basho	Read Replies (1) \| Respond to of 110194

I think it's a considerable exaggeration to say house prices are crashing here in Oz. Some previously overhyped marginal areas have been hit hard -- as per the SMH article cited the other day -- and certainly much of the heat has come out of the residential RE market but mortgage borrowing is so high that the RBA is making unhappy noises. Again. Also, Australia is in the midst of its biggest ever resources boom which is creating very rapid growth in WA, the NT and Queensland. Mixed bag, really, with the latest consumer confidence figures falling off a bit of a cliff. In general terms, I don't think anything like reality has yet hit other than in isolated pockets although the day may not be far off, IMHO.