| ||"FORECASTING IS SIMPLY A PROJECTION OF HOW IMBALANCES WILL RESOLVE"|
What an awesome quote. THIS BOOK IS AMAZING. I really couldn't understand why interest rates had been so low for such a long time, and the reason is the industrialization of formerly third world countries. Countries like China and India have extremely high rates of savings, and all of this money has to go onto the open market trying to find borrowers.
Remember, interest rates are the market rates for the cost of "renting" money. If there's a lot of it going around, it's cheap to rent. If it is scarce (just like in today's liquidity crunch) then the costs will rise due to demand. It's not about the fed keeping a lid on rates (the fed can do this, at the risk of inflation) - it's about market forces of supply and demand.
I am glued to this book. It is so completely obvious what is coming in the economy - very high interest rates and a return to high inflation. With the U.S. Government at a record deficit, renting money is all about supply and demand. As of June 2007, the U.S. federal debt was nearly 9 trillion dollars, or $47,000 per adult in the U.S.
Those of you who frequent this blog will recall that I said that the shit was going to hit the fan around July of this year with regards to Real Estate, and many of you thought I was extreme. You'll also recall that I said that real estate was going to be about 1/3 today's levels, and I think it's going to be that but even worse, this time prices will not spring up like they have in the past. Therefore, the typical L.A. house that was around $600 grand will hit around $200 grand and stay there for a lifetime.
I'm going through his personal history forecasting steel supplies, and it's mesmerizing. I'm not sure that each and every one of you would find this book exciting, because I'm completely fascinated by economic forecasting - moreover, I'm fascinated by how incredibly naive people can be (in the face of obvious trends) in favor of optimism.
CLICK HERE TO BUY IT ON AMAZON!
| ||Posted 9/18/2007 5:10 PM - 1200 Views - 8 eProps - 8 comments|
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