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binve (< 20)

... Wow. That is very interesting.

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August 20, 2010 – Comments (1)

First, if you have not read my new post (it got buried pretty quickly this morning) please see it here:
Do Deficits Matter, Debt and Deleveraging,
Resource Constraints, In/De/Hyper/Stag/etc./flation, Part I - http://caps.fool.com/Blogs/do-deficits-matter-debt-and/436169.

Second, Jake at Econompic has a very interesting observation

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From Treasuries: Bubble or Accurate Reflection of Slow Growth?

Sean over at Dead Cats Bouncing details:

While another economic crash landing remains unlikely given the inventory and corporate funding backdrop, there won't be much room for policy error either politically or at the Fed in coming months. Monthly headline US CPI has now fallen for three consecutive months, which has only happened a handful of times since the data series began in 1947. If you take the rough and ready rule that a 10 year government bond yield should equal the long term growth rate plus the long term inflation rate, then it's clear that a near 2.5% 10 year Treasury yield is pricing in a grim growth scenario.

Well, I for one was surprised just how strong the relationship has been.

1 Comments – Post Your Own

#1) On August 20, 2010 at 12:13 PM, binve (< 20) wrote:

I don't agree with the commentary in italics: While another economic crash landing remains unlikely given the inventory and corporate funding backdrop, there won't be much room for policy error either politically or at the Fed in coming months.

I don't think the cause of / or aversion of a double dip lies on the backs of corporate balance sheets or the with the Fed. I think a number of people, predominately Dave Rosenberg, is calling it correctly: this is primarly a consumer balance sheet recession.

There are a lot of mixed macroeconomics going on here. And I think calls for monolithic inflation or deflation will be missing the mark that a lot of very powerful forces are playing tug of war with the economy and the economy will not 'break cleanly'. I think there will be a lot of mixed causes and effects.

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