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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (59373)	5/14/1999 2:13:00 PM
From: BSGrinder	Read Replies (1) \| Respond to of 132070

Michael, I think I am inclined to agree with LT that short-term inflation and higher interest rates are the first step towards the unraveling of the asset bubble, with the ultimate result a deflationary depression. Remember your point about how bond prices are a function of supply and demand as well as inflation expectations? You have made the case for there being an over-supply of debt, which will not go away just because inflation fears subside. Perhaps T-bonds will suffer less than corporates, but isn't the spread more likely to expand by T-bonds lowering more gradually, rather than rising while corporates get bashed? Won't bond buyers require more interest to compensate for the weakening dollar, if "our disastrous economy" becomes more apparent? Thanks for your thoughts, /Kit

To: Knighty Tin who wrote (59373)	5/15/1999 2:02:00 AM
From: S. maltophilia	Read Replies (1) \| Respond to of 132070

MB Interesting. I'm the owner (long) of the entire open interest of TYXIY. I think eventually your scenario comes about, but not until past this fall, or the market's. In the meantime, Easy Al keeps on shoveling out the liquidity, and buyers of long paper get more and more reluctant. Oil stays up for a while, and nobody believes in the "core" inflation numbers except a few New Yorkers who don't drive cars or eat at home. Until/unless the economy slows drastically, I see low long term yields more as an expression of faith in the current pair o' dimes and that faith is likely to get a good shaking soon.