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

To: Wyätt Gwyön who wrote (69346)	9/5/2006 12:36:35 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Mish, as i recall you expected Greenspan to stop raising at 1.75% or something. so it must be quite a shock to you that we have a 5-handle these days. despite the much higher interest rates, there is a real risk of USD imploding. much as the Fed and Treasury like to talk down USD, they do not really want an implosion because WMT goods will skyrocket in price. i doubt this is a rate-slashing environment. certainly a one-month fall in energy (which has much more to do with the weather and geopolitics than with demand changes) is not going to be considered deflation and a good excuse to cut rates. Yes I did think it would be 3 and out Then again I do not think anyone expected to see the speculation in real estate that we did see. That real estate bubble kept consumers spending and kept job growth going. As for declining prices 1) Real Estate 2) Restaurants 3) Gasoline 4) Natural Gas I will also throw in as it is significant 5) Traffic at Las Vegas is declining and profits are even lower if I read Russ's post correctly Personally I think gasoline prices may be being manipulated lower to help the Republicans win this Autumn so I am willing to toss that out of my list The $CRB cracked a long term trendline If I am not mistaken, I can add this: 6) prices of Trucks are lower Personally I think 1, 2, and 5 are very telling, and probably 6 as well. What we are seeing is a shift away from consumption and spending. The savings rate has not gone up yet but it will. 1, 2, and 5 have everything to do with the Austrian concept of "Time Preference". You can call me nuts or whatever you want but I think we are on the verge of a STRONG SECULAR (as opposed to cyclical) shift away from consumption, and the implications of that shift will be massive. Since this shift has just started, yes you can look around and laugh and say prices are falling peanuts compared to how much they rose. Well OK, but the inflationary boom led by speculation in housing is now over but the fallout from that has just barely started. Mish