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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 (74852)	12/5/2006 5:06:48 PM
From: andiron	Respond to of 110194

why do we have housing problems, despite credit bubble? guidance can't be an obstruction. Gold/oil not bahaving as badly as it would..

To: mishedlo who wrote (74852)	12/5/2006 8:32:10 PM
From: Mr.Creosote	Read Replies (2) \| Respond to of 110194

Fantastic exchange of real ideas by Mike and Mish. However, I don't believe that either of you can benefit from knowing WHAT happens next whether it's hyperinflation or downright deflation. What really matters is not the WHAT but the WHEN. Consider also the possibility that prices may just (at the expense of the dollar) continue to drift upwards for several more months (possibly years) in a perpetual low volatility environment. Bottom line is that none of us knows the WHEN and focusing and debating the WHAT doesn't make anybody any money. I challenge you guys to think of what event or series of events would have to occur going forward that would move the market into a different regime. In other words what must happen first to identify the change into a new regime whether that is hyperinflation, deflation, or something else. Other than market prices themselves that is.

To: mishedlo who wrote (74852)	12/6/2006 5:30:16 AM
From: Mike Johnston	Read Replies (2) \| Respond to of 110194

Mish, i don't buy your argument that money growth is close to zero, even you admit that the world is awash in dollars. To me awash is an understatement. If money growth is in low single digits, where is that flood of dollars coming from ? You admit that credit is expanding 10-20%, doesn't that show you that interest rates at 5% are way,way too low ? You attribute new liquidity entirely to private sector credit creation, to me things are just too out of whack to accept that. People are leveraging into bonds at 75 bp below Fed Funds, at levels close to CPI inflation ( below inflation rate IMO ), with dollar tanking, credit going through the roof and stocks and commodities surging higher ? That would be beyond risk taking, beyond foolishness, conventional economic analysis would say that this is financial suicide. ( Of course unless some very powerful entity stands behind you ) Obviously there is no proof that the Fed is monetizing the bond market or playing games with Fannie Mae, only my strong suspicion. What i am saying is that if this indeed is the case then there is no going back, hyperinflation will happen. You bring up many comparisons to 1929. IMO "1929" was 6 years ago. But back in 1929, the US was on the gold standard, so that means the government could not inflate house prices 300% to avoid a Depression ? Or maybe the guys in charge were not smart enough ? In fact it wasn't until Roosevelt gold confiscation and revaluation that the economy started to climb back. By the way, why do you call me an "inflationist" ? I should be called a "deflationist" since i despise inflation and i am rooting for deflation. Greenspan, Bernanke, Kudlow, Mc Culley et al are true inflationists, not me. LOL

To: mishedlo who wrote (74852)	12/6/2006 5:45:28 AM
From: TobagoJack	Respond to of 110194

pure evil ... toll brothers now that housing is clearly no longer as robust on the way up platform companies are starting to get hit in valuation even as they expand planet-wide operations and global presence monetary gold is turning out to be slightly better than refrigerators, as far as non-asset class goes risky assets are all jacked high trusts, trusts of trusts, ipo of trusts, layers of leverage, blind pools of 1928 are all in plain view as (hedge) funds, funds of funds, ipo of funds, layers of leverage (12x at fund level, 5x at fund of funds level, 25x at bank level, multiplying to 1500x over all), and special purpose acquisition companies of 2006 do we have 24 months more of comfortable existence? can japan + usa + china hold off the inevitable? let's watch :0)