Better SIT DOWN to read this

$20 billion added to money supply this week, but after 2 weeks totaling $79 BILLION in DECLINE, I am not too impressed.
If watching money supply is valid indicator at all, the damage has already been done.
We see CHina REALLY trying to put on the breaks to runaway economy.
WE see FNM probed. We see AIG probed.WE see MRK drug pulled from market.We see Star GAs PArtners stock obliterated.WE see almost $200 GOOGLE! Stock has doubled in less than 2 months??!!
VIX inched up today, interesting...staying above its 20 MA...we see 5 day CPC at .70
We know total credit market debt is ABOVE 300% of GDP now (well above the level which brough us a depression)
http://www.unknownnews.net/040217pb.html excerpt FEB 2004
"What is perfectly clear from simple arithmetic is that without a sudden increase in the number of jobs and the wages they pay, individual debt can not be serviced by personal income. Worse yet, not only are people not saving, but their financial reserves are not in real cash. The only thing keeping the “national ponzi scheme” going is the illusion of wealth created by the Federal Reserve’s low interest rates and liquidity that has allowed stock market valuations and housing prices to artificially inflate."
http://www.economagic.com/em-cgi/charter.exe/var/vel-gdp-per-m3 Velocity of money at LOWEST levels in over 40 years.
WILL or HOW WILL consumers "keep it up"? From THURSDAY COMSTOCK
"The negative effect of poor jobs numbers on incomes is easy to see. In past expansionary cycles personal income adjusted for inflation and transfer payments was up an average of 12 percent at this stage, compared to only 4 percent now. To maintain even the present level of tepid spending, consumers have gone into record debt in addition to getting plenty of help from tax refunds and mortgage refinancing. Now mortgage refinancing is down over 80 percent from the peak, and the tax refunds are in the past. Under these circumstances consumer spending is likely to be restrained and the economic soft patch is likely to continue. With Taiwan Semiconductor recently confirming the continuing pattern of gloomy forecasts for the chip industry from leading companies, we see no relief from the tech sector as well."
HOUSING BUBBLE? Read this from AUG 2002 iTuliphttp://www.itulip.com/qc082002.htm
"What's "cannot afford" mean when buying a home? The historical average for the cost of a mortgage is 25% of gross income. That's what the banks used to recommend, before they got desperate for households to sell mortgages to. In bubbly real estate market like Boston's today the average mortgage has reached 44% of income.
That's a housing bubble. Period."
March 2004 headline:
Consumer debt loads at recordBy Barbara Hagenbaugh, USA TODAYWASHINGTON — U.S. consumers have taken on record levels of debt as low interest rates have lured them to buy bigger houses and fancier cars and to charge more on credit cards than ever before.
•Wheels. Borrowing for cars has jumped as consumers are lured into auto showrooms by promises of no money down and 0% interest rates. Through mid-February, the average amount financed for a new car purchase in 2004 was $24,157, up 11% from 2001, according to Power Information Network, an affiliate of consultant J.D. Power and Associates. About 40% of consumers trading in cars currently owe more than their car is worth.
***OK enough enough already......WHat I am saying is we have BORROWED from FUTURE demand...autos, housing.....almost everything!
And we have managed to let our dollars flee this country to Asia, and so has INVESTMENT dollars, and we have built CHINA into a manufacturing SUPER POWER, now India and PAkastan are luring SERVICE SECTOR jobs away from this country.
With record budget deficits, and record trade deficits....you would think ALL this demand for credit would drive UP Interest rates?
http://mwhodges.home.att.net/hodges.htm GRandfather Economic Report
AUG 2000 Prudent Bear Debt is truly the “sword of Damocles” hanging over the American economy at this juncture. At some point, even the soothing words of Alan Greenspan about America’s productivity miracle will not be sufficient to obfuscate this reality.
WELL 4 years later and we are even more in debt...hey nothing has happened!!
Surely there is NO reason for China and Japan to stop buying our debt?
HAS the DOW REALLY recovered???
http://tinyurl.com/43ccb
If you figure since 2002 the dollar index is down some 30%.....the dow VALUE has nosedived.
WE go from credit expansion to credit contraction...level off for many years....and begin cycle again....IMHO the period ahead of us is for contraction...K-Winter....tough sledding....my long term view.
SHort term? RIPE for manipulation, be careful.
Duratek