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

To: I_C_Deadpeople who wrote (86176)	9/12/2007 2:27:59 PM
From: zamboz	Read Replies (3) \| Respond to of 110194

Disco was bad. Some young people ask me about it. I tell them the story of some guy who passed out at a disco club. He was taken to the hospital where it was determined his extremely tight pants were cutting off his circulation. The pants could not be removed with being cut off. Once the guy's pants were removed, the hospital staff saw that he had a cucumber taped to his torso. That is all one needs to know about disco.

To: I_C_Deadpeople who wrote (86176)	9/13/2007 6:35:25 AM
From: Real Man	Respond to of 110194

What's DISCO? Some kind of drug? -g- Maybe if they legalize smoking stuff, it won't seem all that bad after all. -g- Anyhow, clearly, collateral declining well below the loan value will be very deflationary given that nobody has any savings and is therefore unacceptable. If nothing is done, we'll have lots of empty new subdivisions and the Great Depression. So... is a 42% increase for a 30% dollar drop a bubble? I think it's just value staying put. One also should not forget inflation, which is high even in all these "strong" currencies. A 50% dollar drop mathematically justifies a 100% bubble. The effect of popping housing might not be that bad after all if they can raise the fiat values of all these homes by dropping the dollar. It's getting pretty desperate in the housing land. But... Look where TYX is - it's rock bottom, dragging spreads down as well. BB will cut now, and everyone will pay for those bubbleheads getting into all these ARMS and other exotic loans. My bet is 25 bips for now. Stocks should drop though - we are crashing into a recession. This just might send the dollar crashing down a lot and long-term yields up. If so, then we are seriously screwed. However, for now TYX is low, and SO ARE fixed mortgage rates. The Fed will have to work with ECB to ensure the dollar doesn't drop through the floor as they cut. They will not be able to cut to 1% again, but 100 bips is doable, I think.