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

To: orkrious who wrote (82053)	5/23/2007 10:53:46 AM
From: John Vosilla	Respond to of 110194

I still believe any comparison of today in the US to 1929 or Japan 1989 is erroneous. Perhaps we are headed towards 1973 and China towards their 1929?

To: orkrious who wrote (82053)	5/23/2007 11:32:57 AM
From: Mike Johnston	Respond to of 110194

let's not forget, these are private entities - i see their extreme leverage and propensity to squeeze out even the last bip of yield as nothing but a natural reaction of private capital to monetary inflation - essentially it is trying to preserve its purchasing power. You have entities like Warren Buffet sitting on tens of billions in cash. He can either sit on the cash and collect 5% interest in times of 15% inflation and watch the value of his stash evaporate to a 1/3 in a decade. Or he can use this money to buy some businesses that will preserve his wealth and throw off some cash as well. We are witnessing the flight from money.

To: orkrious who wrote (82053)	5/23/2007 11:37:51 AM
From: Mike Johnston	Read Replies (2) \| Respond to of 110194

ultimately a credit bubble is destructive........ the production of real wealth is hampered by it, until the point comes when the pool of real savings begins to inexorably decline. guess what the 'authorities' (these days, the central banks) will do when the bust comes? do you think they will allow the liquidation and redirection of capital to proceed unhampered? not a chance! they'll do exactly what Japan has done, drop their rates to zero, and pump all out to revive the bubble. this cycle will be repeated until the fiat money/fractional reserves system meets with its pre-ordained Misesian end Great quote. It seems Trotsky is on the hyperinflation bandwagon. -g-

To: orkrious who wrote (82053)	5/23/2007 12:58:25 PM
From: bart13	Read Replies (5) \| Respond to of 110194

are you really so naive to believe that the financial markets are 'controlled'? note, i'm not denying that statist intervention has an effect on the markets. i only don't believe that any of the effects have been intended or are in any way controllable (who can 'control' what thousands of hedge funds decide to do day after day?). I'm far more on the other side of this one, and there is much hard evidence of actual and successful control, and for decades. Many statements in the various FOMC minutes admit of intention and success in control, and the various TIO operations and their effects are almost impossible to see as coincidence. It's not a matter of control of where the actual effects occur, and I'm not at all certain that the Fed and Central Banks really care where it goes... just that they basically prevent significant deflation, that nominal household net worth keeps climbing and that confidence in their respective fiat currency is managed well enough to not become super over or under valued. btw., the historical record shows that widespread belief in the control authorities (governments or central banks, depending on the era) allegedly have over markets becomes most entrenched at precisely those points in time when unmistakable proof of the opposite is lurking just around the corner. it's only human to extrapolate, but financial markets don't act on exogenous cause-and-effect principles. i've frequently tried to point this out via examples. 'if A then B' doesn't work in financial markets, attempts at rationalization in the financial media notwithstanding. the force that is driving it all, the collective social mood, is outside of the control of ANY outside force (including your central planners...). There's a reason that the widespread belief exists - it's mostly true. Note that I'm not saying that they can always prevent situations like the Great Depression or a hyper inflation - they can't. The piper must be paid at some point. But they can and do create close to what they want the great majority of the time. Just because there has been a relative deflation in Japan since the early '90s does not mean that the BoJ is or was anywhere near powerless to reverse it... and that's what the actual stats show. The collective mood is far from the only factor, although it is important... but the real point is that the actual and historical correlation between sentiment and nominal household net worth is unmistakable... and nominal household net worth is in no way beyond the control of the money creators. To deny that the A of money creation rates does not result in the B of things like increases in nominal household net worth and is not the major factor over time ignores the very real and provable power and control of those money creators like the Fed, etc.... and it also ignores the very real other side of the broad equation - that significant drops in money creation rates or other monetary actions do not also have a large intentional component.