big trouble at mill: usd, page-32

re: trouble at mill: inflation here we come Message to the overcommitted US homeowner:

"Be afraid. be very much afraid!"

From post 1066935, this thread:

"The current 10.2% CPI/annum is too high in view of the fact that the FED interest rate is 5%. It is useless to increase interest rates by 0.25% in stages in these conditions.

One can't say that this 10.2 % will last throughout the year, it could go lower or higher".

(And our famous US secretary of Treasury, Snow, thinks that inflation is under control).

The talk is that the FED may indeed speed up increasing interest rates. Hence the increase in the $US for the time being.

If so, then it would be difficult to liquify the DOW and the Housing sector at the same time. Something has to give and it could well be the slowing down Housing sector, together with consumption and a decrease in the already overcooked GDP.

It was suggested that a lowering of the Oil price to $65 would be a great help. But that would only be relative to income. It may stil be too high in these conditions.

Then there is the talk about liquidity. If sentiment is negative, then it does'nt matter how much credit there is available, it won't be taken up by an already overstretched consumer.

The whole situation reminds me of the cruise ship's band playing flat out and the couples dancing while the ship is slowly sinking.

Gerry