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	Forecasting America's Destiny ... and the World's
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Generational Dynamics Web Log for 20-Nov-2008

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Markets fall to new lows as deflation tightens its grip

Markets fall to new lows as deflation tightens its grip

Fears grow of a Detroit auto maker bankruptcy.

Market summary, 19-Nov-2008

For over a year, the markets have been following a continuing downward trend. On Wednesday they reached a new low, as the Dow Industrials index closed at its lowest level since March 31, 2003.

The economic news on Wednesday was terrible:

CPI fell by record amount in October. (Source: nytimes.com)

• October's Consumer Price Index (CPI) fell by a record amount, making the deflationary spiral obvious enough that everyone should see it by now. I hope that there are no more regular web site readers who are expecting hyperinflation. We are now firmly in the grip of an inescapable deflationary spiral.
• The Fed reported that a recovery isn't likely until 2010, rather than 2009.
• The $25 billion auto maker bailout plan has apparently collapsed. Congress will go home this week, and won't return until January 20. Some pundits are claiming that at least one auto maker will go bankrupt by then.
• Housing construction starts fell to their lowest level since record keeping began in 1959.

The economic news is scary and disastrous. But that's OK. President Obama will save the world within a week or two, after he takes office on January 20.

We're still waiting for the generational panic and crash that I've described so many times. With the market now down 44% from it's peak, I'm really amazed that the deadly chain reaction of imploding CDSs hasn't begun by now, but it has to begin at some point.

(Comments: For reader comments, as well as more frequent updates on this subject, see the Financial Topics thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) (20-Nov-2008) Permanent Link
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