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

To: Mike Johnston who wrote (69971)	9/19/2006 5:52:01 PM
From: Bonefish	Respond to of 110194

What they should do is: Just let Real Estate fall rather than put the next generation of buyers in a no win situation. Eliminate tax breaks that promote speculation. Raise rates to a level to stop inflation. Are rates historically high considering the environment? No way. This would also support the dollar. Correct the border problem. Divide "before a major civil war" and get out of Iraq. -Bone

To: Mike Johnston who wrote (69971)	9/19/2006 6:35:41 PM
From: benwood	Respond to of 110194

The chances are REALLY good that if they sustain 10% real cost of living inflation, my pay will at best rise at an avg of 6% and consequently after 6 years I'll find my buying power down about 1/4. I think they higher they engineer inflation, the more the middle class will lose. But if it saves their wealthy buddies, they'll do it.

To: Mike Johnston who wrote (69971)	9/19/2006 6:38:47 PM
From: loantech	Respond to of 110194

Great post.

To: Mike Johnston who wrote (69971)	9/19/2006 9:55:57 PM
From: John McCarthy	Read Replies (2) \| Respond to of 110194

Hi Mike - I am not being argumentative and your summary is excellent ..... in noodling on this part - it is hard (for me) to fathom .... Maintain 10% + inflation for the next few years to limit nominal declines in housing prices and to try to increase wages. PLUS Lowering long term rates below 4%, most likely to 3.5% to allow many adjustable mortgages to be refinanced at low fixed rates my dumb ass 2 cents says .... (a) the Fed cannot directly manipulate long term rates (and I could be wrong) (b) if announced inflation rates were allowed to rise anywhere near 10% it would instantly give us problem(s) with: - selling treasury notes to foreigners i.e. they would req. higher rates ... - further kill off the dollar because e.g. if your China do you really want to hold $300 billion to $400 billion of USA dollar debt while USA inflation going north? - force foreign holders of the dollar to (perhaps) move out of them quickly - further hurting the dollar ... - in the end there would be less people to peddle our debt to - and right now we are bond addicts ... please - no flames ..... Mike's analysis is the closest I've seen to the complete picture of just what the hell is going on .... i.e. dollar, commodities, etc. the point about driving rates down so that home buyers can re-finance (to me) is the perfect way to attempt to get out of this housing time-bomb .... in the end - I guess my question is: why not (from the fed's point of view) allow a hit to housing prices .... to within some range .... regards, John McCarthy