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

To: UncleBigs who wrote (71195)	10/6/2006 2:40:01 PM
From: GST	Read Replies (5) \| Respond to of 110194

Mish has never dealt with several of the key aspects. 1. We are a debtor nation with a zero net savings rate. 2. We have a huge government deficit. 3 We have a huge current account deficit. 3. Our lack of savings and debts make us extremely dependent on foreign credit to service our debts. 4. The risk premium we pay on credit is very small. 5. The slower our economy the more we will pay for credit -- the risk premium is a function of how fast we grow. Less growth means more risk. 6. The slower we grow the more both fiscal and monetary stimulus is added. 7. Housing will slow our economy. 8. A slower economy will be persistent as our credit risk rises and the cost of debt incurred adds to our current account deficit. 9. Even as our long rates rise, our dollar will go down. This will add to the currency risk, adding to the cost of foreign credit. 10. A falling dollar will increase the cost of imports. 11. Slow growth and rising interest rates will add an enormous burden to existing public debt. As the economy slows, the cost of foreign borrowing rises and the federal debt will soar due to lower tax receipts. 11. We face stagflation -- no compelling case has ever been made for deflation -- and certainly not by Mish who has never addressed these issues.