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

To: GraceZ who wrote (78092)	1/24/2007 11:34:21 PM
From: glenn_a	Read Replies (1) \| Respond to of 110194

((the Fed didn't produce the rise in house prices)) LOL!

To: GraceZ who wrote (78092)	1/25/2007 1:36:23 AM
From: 2sigma	Read Replies (1) \| Respond to of 110194

Grace, I disagree strongly with your statement as follows: "Furthermore the Fed didn't produce the rise in house prices." The Fed (the govt.) was in charge of: 1. Easing credit requirements. 2. Increasing liquidity. 3. Lowering interest rates. All of these played a major role in allowing house prices to rise; Add willing buyers/suckers...case closed. Haps.

To: GraceZ who wrote (78092)	1/25/2007 4:45:43 AM
From: Mike Johnston	Read Replies (2) \| Respond to of 110194

Maybe you are right. Deficits do not matter. If asset prices rise by several trillion a year and cash is extracted out of those assets to spend on goods manufactured in Asia, then $800 billion deficit does not matter. The cash extracted from those appreciating assets can easily cover the deficit, in fact it creates this deficit. As a matter of fact this deficit is a necessity. After all, in a nation of people trading houses between each other at increasing prices, people shuffling ever increasing amounts of money and debt, issuing, securitizing, trading and analyzing debt instruments, people living off extracted housing equity etc. , who is going to produce consumer goods that enable daily life and pleasures of those people ? Of course the Asians will. So as long as Asians cover the deficit with their bond purchases everything will be ok. If Asians change their policy and will not be willing to work in exchange for IOU's, then the deficit will disappear and some of those money and house shufflers will actually have to go to work to produce something tangible. -