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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 (71025)	10/4/2006 8:17:02 PM
From: Oblivious	Read Replies (1) \| Respond to of 110194

How about disinflation.

To: mishedlo who wrote (71025)	10/5/2006 10:13:59 AM
From: aryana	Read Replies (2) \| Respond to of 110194

"How do you know that a $25 drop is not a change in trend?" It may be but it is too early to tell. I can make a case for inflation in energy prices over the last 5 years or so that is backed up by an upward trend in prices as well as sustained periods of higher prices ... higher highs and higher lows. If we have a sustained drops in energy prices over the next few years I will call that deflation but in the mean time it may just as easily be volatility caused by the weak hurricane season, upcoming midterm elections and easing tensions with Iran. "What about housing? That is everyone's biggest expense. I will state that the evidence strongly sugests lower housing prices. One can not IMO bitch about rising rents while ingnoring falling prices while doing the reverse for the last 3 years. I will not accept it." Housing prices have come too far too fast. They are certainly due for a correction in certain but not all areas. They have been led higher by lower interest rates, easy money, and speculation not by fundamentals like higher wages and job growth. Rents are rising because people can't afford to buy at these prices. Stabilizing and falling home prices are reducing demand to the point where people only buy if they can truly afford to own at these prices and intend to stay put. It's not going to end pretty for FB's and GF's but I suspect these prices will again look "cheap" in 15-20 years. "Now what do you make of $4 generics at Walmart? How about falling truck prices? What about a trend to outsourcing student teaching? What about medical tourism? What about restaurant prices." In my view asia is exporting both inflation and deflation. Inflation is in form of high energy prices, low interest rates, relative currency valuations, and an insatiable demand for our loans. Just about everything else I can think of coming from asia clearly is deflationary in the form of lower wages (especially at the low to mid income levels), and lower prices of goods that they manufacture. With energy prices stabilizing there is a chance that asia will become a net exporter of deflation. The case can be made that it is happening now. The problem is there is nothing we can do about it anyway. We can't control the situation by tweaking the fed funds rate. That path only leads to bubbles and their aftermath. I feel that the fed is trying not to achieve a balance between inflation and deflation (which they cannot control anyway) but a balance between dangerous bubbles and crashing the economy which has become increasing reliant on such bubbles. Good luck B.B. I wouldn't want your job.

To: mishedlo who wrote (71025)	10/6/2006 12:28:31 PM
From: GST	Read Replies (2) \| Respond to of 110194

<I AM NOT CALLING THIS DEFLATION> It is hard for me to see that you are contributing much to the conversation other than pointing out that there are a variety of ways in which prices fluctuate over relatively short periods of time. Short term price fluctuations are noise -- they are what you would expect. We have been in a long term inflationary trend for decades and are likely to be in that trend for as far as the eye can see. Within that trend, prices vary. This seems more or less trivial. There is no data to support the contention that the trend has changed from inflation to deflation, and no "logic" that stands up to serious inquiry that would lead us to believe that the trend will shift. The area for debate is how bad will inflation be, not whether there will be deflation.