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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 (78100)	1/25/2007 11:55:24 AM
From: GraceZ	Read Replies (2) \| Respond to of 110194

Maybe you are right. Deficits do not matter I didn't say that deficits do not matter, don't put words in my mouth. I said they matter in the context of other income and asset values. Aren't you a B-school grad? Are you not capable of understanding balance sheet basics? As for Americans not producing something tangible, the US trades off the number one position with Germany as being the world's largest exporter of goods. And, we have a trade surplus in services. I produce something tangible every day (what I produce is increasing less tangible) but increasingly our economy is based on intangible products. As the real cost to produce goods falls closer to zero every day, the relative value of industries that produce goods also falls. We have to move to intangible products because this is where the highest returns still exist. Things like software, business services, banking and capital services, medical devices and drug patents things with a high value add component. We are moving to making things that haven't yet reached the commodity status that most consumer goods have.

To: Mike Johnston who wrote (78100)	1/26/2007 3:31:32 PM
From: ahhaha	Read Replies (1) \| Respond to of 110194

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. Asian purchases chiefly come out of income rather than out of asset leveraging. The reason? Average cost of items purchased. Does one take out a second mortgage to buy something Asian? The majority of equity extraction has gone back into the property. It's a prudent thing to do. Are you calling others imprudent while you consider yourself prudent? The cash extracted from those appreciating assets can easily cover the deficit, in fact it creates this deficit. Which deficit? As a matter of fact this deficit is a necessity. Why do you look at THAT as a deficit? We give them promises to pay while they give us real material entities which can be bit. 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? Guys earning a living by teaching after having been designated as knowledgeable? Sounds to me like that's no better than a circle of jerks scratching each other's back. Who pays to feed them? They extract food but they create none. What do they create? Claims on property backed by authority in cahoots with them. Let's have it out. Let's see who gets the seat when push comes to shove. Of course the Asians will. You damn well better believe it. They can compete the Gringo whose hands are tied with socialism into the Stone Age where all socialists find themselves. So as long as Asians cover the deficit with their bond purchases everything will be ok. This is a popularly held belief, but has it to do with anything? If a 6 kilometer meteor hits the earth, then... 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. Like you? You will have to go to work. I'm willing to bet you that I could compete you into the Stone Age in whatever it is you think you can do. You're protected by the things you decry.