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Reply #41: ALL SIGNS POINT TO BUBBLE (Last article at The Daily Reckoning) [View All]

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54anickel Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Feb-03-05 10:27 AM
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41. ALL SIGNS POINT TO BUBBLE (Last article at The Daily Reckoning)
Heh, some of the stories on the way down the page are interesting - people drawing on their home equity for SuperBowl tickets? :crazy:

Historically, consumer price inflation has, indeed, been the regular key feature of credit excess. But this pattern began to change drastically in the course of the 1980s. For the first time, protracted, exceptionally sharp increases in stock and real estate prices occurred in various countries, while price increases for goods and services remained moderate.

At first, there was little inclination to see in soaring asset prices a feature of inflation, even though all countries concerned showed a simultaneous surge in money and credit growth. It irritated many experts that this monetary explosion did not show in higher prices for goods and labor, as it had done in past booms. In the late 1980s, Japan had double-digit money, credit growth and soaring asset prices, yet virtually stable consumer and producer prices.

For years, this strange coincidence of soaring asset inflation and simultaneous moderate consumer price inflation was hailed as a sign of economic health and dynamism. It has long been one of Mr. Greenspan's favorite arguments that this unusual coincidence proved the existence of a "new paradigm" economy.


But to repeat, the pivotal hallmark of a "bubble economy" is that the ballooning asset prices are widely used as collateral for a general consumer borrowing and spending binge. In the United States, mortgage borrowing by households during the first half of the 1990s increased by an annual average of $168 billion. This accelerated in the decade's second half to $296.9 billion. But after 2000, it virtually exploded to an average annual growth rate of $615 billion.

It is undisputed that the greater part of the escalating mortgage borrowing in the United States was for purposes other than house purchases. In short, it boosted consumption as a share of GDP at the expense of business investment and the trade balance. That is, it radically changed the U.S. economy's pattern of growth - actually an unsustainable pattern of growth.

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  -STOCK MARKET WATCH, Thursday 3 February ozymandius  Feb-03-05 06:03 AM   #0 
  - Morning Ozy. Nice toon again today.  54anickel   Feb-03-05 06:56 AM   #1 
  - Good morning 54anickel and everyone.  ozymandius   Feb-03-05 08:10 AM   #21 
     - Fixing self-made problems (Heh, love that title!)  54anickel   Feb-03-05 08:15 AM   #24 
  - Dollar Watch  54anickel   Feb-03-05 07:08 AM   #2 
  - U.S. Dollar Down Against Euro Despit  54anickel   Feb-03-05 08:19 AM   #25 
  - Dollar Up After ECB Leaves Rates Steady  54anickel   Feb-03-05 11:09 AM   #43 
     - Is anybody else confused?  TrogL   Feb-03-05 02:45 PM   #56 
        - It's in the timing of the article release. The 2nd article was after the  54anickel   Feb-03-05 05:24 PM   #59 
  - Room to move Fed still has a ways to go before rates hit 'neutral' point  RawMaterials   Feb-03-05 07:11 AM   #3 
  - Are Commodity Prices Headed for Switch to Euros?  54anickel   Feb-03-05 07:11 AM   #4 
  - Trying to get back into things a bit  Maeve   Feb-03-05 07:12 AM   #5 
  - Maeve!!! Good to see you again. It's MAEVE DAY!  54anickel   Feb-03-05 07:17 AM   #9 
  - All hail Maeve, Queen of Connacht!  ozymandius   Feb-03-05 08:13 AM   #23 
     - I'm sending some of the last illustrations to my editor right now  Maeve   Feb-03-05 08:19 AM   #26 
        - That's great Maeve - I'll be PMin' ya to get my reserved copy. Sorry  54anickel   Feb-03-05 08:43 AM   #29 
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  - Will Central Banks Ever Say No to America?  RawMaterials   Feb-03-05 07:20 AM   #11 
  - Saw that one out there, was posted here last week - worth repeating  54anickel   Feb-03-05 07:33 AM   #13 
  - Things Change (another inverted yields speculator)  54anickel   Feb-03-05 07:30 AM   #12 
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  - Falling Spreads Bear Dollar Reality  54anickel   Feb-03-05 07:54 AM   #16 
  - Today's reports:  54anickel   Feb-03-05 08:01 AM   #17 
  - Okay--Initail Claims good, Productivity bad  Maeve   Feb-03-05 08:04 AM   #19 
  - Heh-heh, but ya gotta love the spin they put on those productivity  54anickel   Feb-03-05 08:06 AM   #20 
  - ISM services index falls to 59.2% for January  54anickel   Feb-03-05 11:15 AM   #45 
  - December factory orders disappoint (BUT)  54anickel   Feb-03-05 11:18 AM   #46 
  - Futures charts don't look too happy at the moment...n/t  54anickel   Feb-03-05 08:02 AM   #18 
  - Pre Open Market Update  RawMaterials   Feb-03-05 08:11 AM   #22 
  - Today's WrapUp by Mike Hartman (Fed news)  ozymandius   Feb-03-05 08:20 AM   #27 
  - GACK!  54anickel   Feb-03-05 08:38 AM   #28 
  - A Mega-Deal with Job Cuts to Match  54anickel   Feb-03-05 09:00 AM   #31 
  - Fed's Increase Is Case of Perfect Transparency (interesting part on labor)  54anickel   Feb-03-05 09:14 AM   #32 
  - 10:14 numbers and yada  54anickel   Feb-03-05 09:15 AM   #33 
  - Participants Would Forfeit Part of Accounts' Profits  54anickel   Feb-03-05 09:32 AM   #34 
  - Goo,d lord, they've completely changed the story - nothing like making  54anickel   Feb-03-05 05:21 PM   #58 
  - Massachusetts Probing Gillette Payouts  54anickel   Feb-03-05 09:46 AM   #35 
  - Qwest in Talks to Buy MCI -- WSJ  54anickel   Feb-03-05 09:49 AM   #36 
  - Shell cuts oil and gas reserves by a further 10%  54anickel   Feb-03-05 09:53 AM   #37 
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  - WorldCom's $54M settlement collapses  54anickel   Feb-03-05 09:59 AM   #39 
  - Higher Interest Rates and Slower Earnings Growth  54anickel   Feb-03-05 10:06 AM   #40 
  - ALL SIGNS POINT TO BUBBLE (Last article at The Daily Reckoning)  54anickel   Feb-03-05 10:27 AM   #41 
  - High noon numbers Single  54anickel   Feb-03-05 11:04 AM   #42 
  - From our good friend Atrios - on a privatized SS system  ozymandius   Feb-03-05 11:34 AM   #47 
     - Good grief! That table is an eye-opener. Sheesh, maybe I'll just  54anickel   Feb-03-05 11:47 AM   #48 
  - U.S. Retailers' January Sales Rise More Than Expected  MARALE   Feb-03-05 11:10 AM   #44 
  - probably from redemption of Christmas gift cards  realFedUp   Feb-03-05 12:06 PM   #49 
  - Jan. Retail Sales Up on Holiday Clearance (& gift cards)  54anickel   Feb-03-05 12:18 PM   #51 
  - dupe  realFedUp   Feb-03-05 12:06 PM   #50 
  - 1:25 numbers and yada  54anickel   Feb-03-05 12:27 PM   #52 
  - Market Update 2:30  MARALE   Feb-03-05 01:45 PM   #53 
  - Market Update and Blather  RawMaterials   Feb-03-05 02:24 PM   #54 
  - Data Holds Job-Growth Hope,Inflation Fear  RawMaterials   Feb-03-05 02:37 PM   #55 
  - Closing numbers and blather  RawMaterials   Feb-03-05 03:07 PM   #57 

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