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To: gregor_us who wrote (388487)	6/11/2009 8:24:01 AM
From: Wyätt Gwyön	3 Recommendations Respond to of 436258

inflation in everything you need." we aren't seeing that. nominal PCE down YoY for the first time since the Deprssion. businesses have no pricing power. makes sense when you consider unenjoyment has doubled in a yr while household NW has crshed largest amount on record. there is an obvious desire to raise nominal prices so debts can be serviced on all the overpriced houses in Clownifornia and other dumbzones, but so far the medicine isn't taking. Fed did all it could to narrow mortgage spreads, but at the cost of higher UST yields, which are now raising mortgage yields and crshing refis. if people can't even refi, who's going to overpay for a house? and that doesn't begin to address the wage issue. U6 something like 17% now. no wages, no income, no credit, much lower asset prices. not surprising that people are spending less. the commodity rebound is not feeding into overall inflation, just acting as another deflationary tax at the pump. in any case CRB pass-through to inflation is less than perfect: just 37% on avg in the last five commodity bull markets, and only 18% in the most recent bull market of 2002-2007. (this was mentioned a couple days ago by Rosenberg.) Rosenberg notes CRB inflation pass-through in the stagflationary 1970s was 83%. that's very different from what we're seeing now. until Bernanke starts mainlining stimulus directly to consumer bank accts he will accomplish nothing. and before he can accomplish even that he will receive a big wedgie from the UST market. i still maintain this is just a deadcat bounce and SPX goes to new nominal lows. commodity prices that rallied will get whacked again before it's all over. many houses wind up trading for as little as 20% off the peak, or in places like Detroit, something that approximates zero.* i'd guess what your real "payment" is in Detroit RE is a tax obligation for some place you wouldn't want to live. i could sell you some "near-free" real estate on Mars which would be of equal use but wouldn't have tax and legal liabilities, so it would be a better deal.