Zeev's Turnips Patch-No Politics (ZEEV)

[Joe Stocks]

"The problem today – too similar to 1929 – is that the larger the number and the greater degree that markets domestically and internationally succumb to Asset Inflation Dynamics, the greater the amount of Credit and liquidity required for sustaining the Bubble. How much additional Mortgage Credit will be required this year to sustain housing inflation throughout California, Florida, the East Coast and nationally? How much additional Credit market leveraging will be required to supply the cheap finance necessary to sustain The Great Mortgage Credit Bubble? How much U.S. Mortgage Credit will be necessary to sustain U.S. consumption, the key source of global demand? How much financial Credit will be necessary to sustain the enormous flow of speculative finance to emerging equity and bond markets? How much additional Credit will be required to finance the rising cost of energy and commodities? Investment in global energy research, exploration, extraction and transport?



Well, let’s just answer each of the above questions with “a lot.” The point is that to now sustain myriad asset Bubbles and broadening inflation will require enormous quantities of additional Credit and liquidity. Ask Wall Street and they would enthusiastically avouch that they are quite up to the task – more than able and willing. And, for now, that may indeed be the case. Importantly, however, we have now reached the point – with spiking crude, California home values, and the Current Account Deficit – that the system has developed a powerful inflationary bias. Sustaining the Wall Street Bubble has become immediately destabilizing and problematic."

From Doug Noland.
http://www.prudentbear.com/creditbubblebulletin.asp