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Thread: Financial Crisis - Page 7







Post#151 at 10-04-2001 10:31 PM by [at joined #posts ]
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Subject: The Big B speaks.

Warren Buffet weighed in on the economy today. He says there is no doubt we are in a recession and he thinks it will be long and deep.







Post#152 at 10-05-2001 04:34 AM by Barbara [at 1931 Silent from Pleasantville joined Aug 2001 #posts 2,352]
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Am I right in thinking that this will be the largest infusion of gov't monetary stimulus applied this century to our domestic recessionary economy?

I was thinking back to the well-used criticism of Hoover and FDR, that not enough gov't stimulus kept us depressed.

Robert you may respond to this by reminding us it's more funny money after funny money. That the whole thing is propped up, like that house of cards, and more weight is not good, so to speak.

Wonder if Buffet believes that....if he does, is that what he's saying.

Is there a reasonable way to see in relatively real time the trading activities of the CEO's in their own corporate holdings? I'd feel a whole lot more trusting if the concern over the stock market and the whole keep-buying mantra was backed up by banning the CEO's and top brass of these publicly traded corps of dumping their holdings.

Wouldn't you?







Post#153 at 10-07-2001 01:45 PM by [at joined #posts ]
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Subject: "THERE WAS NO NEW ECONOMY" ,selected quotes from the October 2001 Richebacher Letter.

"Even before the outrage in New York, the world economy was on the brink of concerted recession."

"Business chiefs around the world are not hiding how frightened they are."

"It has to be realized that Fed Chairman Alan Greenspan's aggressive rate cuts are proving to be complete failure. At the very least, they ought to have invigorated the US stock market long ago. Instead US stocks are leading a free fall of stock markets around the world. This is without pecedent in the entire postwar period."

"The economic slowdown in the United States has been in full motion for almost a year. The horrific events of Sept. 11 have probably triggered an acceleration of the ongoing downturn. However they are not its underlying cause."

"The recognition that the US economy is in the grips of a prolonged systemic economic financial crisis has barely started. The worst part of the stock market's crash and the economy's downturn will only begin when people realize the dangerous systemic nature of this crisis."

<font size=-1>[ This Message was edited by: Robert on 2001-10-07 11:47 ]</font>







Post#154 at 10-07-2001 10:18 PM by Ricercar71 [at joined Jul 2001 #posts 1,038]
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Yep, it was a bubble of over-enthusiasm created by a bubble of Fedcredit left over from the bailout of the hedge funds and the world economic crisis beginning with the Bhat devaluation (1998).

This continued in 1999 with the fear of the y2k non-event. In 2000, inventories began to accumulate and was seen as bad news for the economy by some. Greenspan ignored these inventories and stabbed the knife in deeper with steep rate gains even as there was little or no inflationary pressure.

Then of course there was the WTC massacre, an event that kicked the economy when it was already on its way to the floor.

Nosssir, doesn't look good. In my opinion we'd be better off without a Fed, and banks should be regulated to only lend what can already be liquidated in assets. We should go to a silver standard or possibly a kilowatt standard or something, ANYTHING other than money being valued at the price of debt. This is inflation, the hidden tax, the great devaluer of the common man's income.








Post#155 at 10-08-2001 02:53 AM by Brian Rush [at California joined Jul 2001 #posts 12,392]
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Barbara:


Am I right in thinking that this will be the largest infusion of gov't monetary stimulus applied this century to our domestic recessionary economy?

Good question, and in answering it we should use constant dollars (value of the dollar was a lot higher in the 1930s). We should also decide whether the World War II spending that actually ended the Depression counts or not -- probably shouldn't, as it wasn't spent for that purpose.


JCarson, interesting you should reference a "kilowatt standard." Ever play Alpha Centauri? Using energy as the basis of money runs into the problem that, as we move into a high-efficiency economy, less energy will be used to produce equal amounts of value, i.e., the energy standard would be inherently deflationary.


I have to challenge your assertion that inflation is "the great devaluer of the common man's income." As long as a balance of power was maintained between capital and labor, wages rose right along with prices or faster. So actually what inflation devalued wasn't the common man's income but rather income from capital -- the rich man's income. Also Social Security benefits prior to COLAs. Inflation and taxes are the chief economic worries of the rich; layoffs and stagnant or sliding wages are the chief economic worries of ordinary people.


I think it's important to recognize the international character of this recession. Like the other Crisis issues, the economic dysfunctions we face are global more than national. Our main trouble is not in the nature of our monetary system but in the fact that the economy has gone global, and globally imbalances of wealth are awful. As a result, the economy resides, just as it did in the 1920s, on too narrow a consumer base. Everything produced must be sold to North Americans, Europeans, Japanese, Australians, and a tiny elite in every other country. I may have left a few countries out, but the point is that the global economy won't be healthy until income gaps narrow, until the workers producing computer chips and running shoes in China or India can afford to buy the products they produce. For that reason, I don't believe we're going to pull out of this slump just by letting time pass, nor through any purely American government action.







Post#156 at 10-08-2001 02:54 AM by Brian Rush [at California joined Jul 2001 #posts 12,392]
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Pshaw, Barbara. I just noticed -- yes, OF COURSE it's the highest stimulus package this century, that is, this year. DUH!







Post#157 at 10-08-2001 04:47 AM by Rain Man [at Bendigo, Australia joined Jun 2001 #posts 1,303]
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On 2001-10-08 00:53, Brian Rush wrote:
I think it's important to recognize the international character of this recession. Like the other Crisis issues, the economic dysfunctions we face are global more than national. Our main trouble is not in the nature of our monetary system but in the fact that the economy has gone global, and globally imbalances of wealth are awful. As a result, the economy resides, just as it did in the 1920s, on too narrow a consumer base. Everything produced must be sold to North Americans, Europeans, Japanese, Australians, and a tiny elite in every other country. I may have left a few countries out, but the point is that the global economy won't be healthy until income gaps narrow, until the workers producing computer chips and running shoes in China or India can afford to buy the products they produce. For that reason, I don't believe we're going to pull out of this slump just by letting time pass, nor through any purely American government action.
The gap between rich and poor internationally is a major issues we must slove and the dire poverty of the third world is a problem we need to slove too. The grinding poverty of many Islamic countries is contributing to support for Bin Laden's groups and Islamists.







Post#158 at 10-08-2001 01:32 PM by Ricercar71 [at joined Jul 2001 #posts 1,038]
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Brian,

yep, I've played Alpha Centauri, though not as much as I'd like. Maybe there WOULD be deflation on a kilowatt standard...no, almost certainly there would be.

But would it necessarily be harmful if it occurs gradually and if the value of money increases for everyone in the market place?

I am not trained as an economist so forgive me if I speak seemingly without brain.







Post#159 at 10-08-2001 07:44 PM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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Deflation is bad in that it encourages people to hoard money. Why take the risk of investing (and there is a risk you know, look at the NASDAQ) if money in your mattress goes up in value?







Post#160 at 10-09-2001 12:15 PM by Barbara [at 1931 Silent from Pleasantville joined Aug 2001 #posts 2,352]
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On 2001-10-08 17:44, Mike Alexander '59 wrote:
Deflation is bad in that it encourages people to hoard money. Why take the risk of investing (and there is a risk you know, look at the NASDAQ) if money in your mattress goes up in value?
AND, especially if your mattress is more valuable than a savings account or CD.





<font size=-1>[ This Message was edited by: Barbara on 2001-10-09 10:16 ]</font>







Post#161 at 10-19-2001 01:45 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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Economic Crisis ahead?

<font color="blue">
A WARTIME ECONOMY...
...But without the Usual Wartime Stimulus?

In a war economy, the public obligation is to do what is necessary: to support the military effort, to protect and defend the home territory, to stabilize the economy itself, and, especially, to maintain the physical well-being, solidarity, and morale of the people. These may not be easy tasks in the months ahead.

We are facing an economic war -- but not exactly a war economy. That means we get the dislocation without the usual growth. The impact of the September 11 attacks now includes a 14.4 percent drop in stock prices in the first week and collapse in sectors related to travel and leisure, notably airlines, hotels, and resorts. As these events cascade through the economy, they will weaken fragile household balance sheets and precipitate steep cuts in consumer spending. This, in turn, will deepen layoffs and depress economic activity. The ensuing recession could be severe.

This is not merely a shock to a healthy system, requiring only limited measures to restore confidence and stimulate spending. Since 1997 consumers have been financing consumption in excess of income. Those who had stock-market winnings borrowed against them. Those who did not borrowed anyway. But capital gains turned negative 16 months ago, and consumers are in no position to borrow more. What has happened since September 11 consolidates and accelerates a pullback that was already well under way.

Estimates last summer by my Levy Institute colleague Wynne Godley were that unemployment would have to rise to 7.4 percent just to bring household expenditures into line with income. Unemployment would rise as high as 9.0 percent, Godley estimated, if households returned to normal post-World War II saving levels. That was before the recent events.


We are in for an economic crisis.
The sooner this is recognized
and acted upon, the better.
There is thus no chance that events will right themselves in a few weeks or that we will be saved by productivity growth, as Federal Reserve Chairman Alan Greenspan professes to believe; nor will the economy be rescued by lower interest rates or the provisions of the recent tax act, most of which take effect after 2004. Rather, we are in for a crisis; the sooner this is recognized and acted upon, the better.

Normally in wartime, largescale support to the domestic economy is not needed, because of vast increases in military expenditure. But what we face so far is a veneer of military action over a worldwide diplomatic and police offensive. In a $10-trillion economy, the $40 billion already appropriated for the military and for relief is minor.

Including the airline bailout, further programs exceeding $100 billion may soon appear, including unemployment insurance, extended tax rebates, and payroll-tax relief. But all of this is not likely to be sufficient. Indeed, the concept of "stimulus" should be discarded in favor of the objective of economic stabilization -- implying a sustained effort commensurate with the crisis as it unfolds.

Business and capital-gains tax cuts are useless here. Without profits, reduced taxes on profits have no effect. And without sales, investment is not likely even if the tax regime favors it. The logic and also the motives of those proposing such measures are to be suspected. All wars attract profiteers.


Congress should repeal the tax cuts
scheduled to take effect after 2004.
Personal tax cuts pose another problem, even if aimed properly at working households: They may not be sufficient if anxious consumers are in a mood to increase their reserves. Of the available tax-cutting options, temporary cuts in payroll taxes are the best, since they will immediately boost take-home pay. Shibboleths about the Social Security trust funds should not stand in the way of this simple and progressive measure. And if Social Security reserves contribute to relief of the present national crisis, then we have a solemn moral obligation not to use that contribution as an excuse to cut benefits later. To repair the long-term damage to federal finances, Congress should repeal the tax cuts scheduled to take effect after 2004. That will help bring down long-term interest rates.

The cautious men are in charge at the moment; their attitude can only bring disaster. There is no danger of overdoing fiscal policy anymore; inflation stimulated by excess demand is not even a remote threat. The initial program could easily be three times what has been so far proposed.

Increases in spending on public health, education, transportation, and other areas are absolutely needed and should be funded liberally. But a new program of revenue sharing is most readily implemented, least likely to be dissipated in saving or imports, and also the least partisan in concept. Direct purchases by state and local governments now comprise nearly 10 percent of gross domestic product; they have been rising rapidly in the past few years and will fall rapidly as revenues are curtailed. To prevent this and create new capacity for state and local action, including direct job creation and social aid, revenue sharing could be on the order of $300 billion this emergency year, with a phasedown as events warrant. This would give state and local governments new fiscal capacity that they can use at once to avert tax increases and even permit tax holidays for local property and sales taxes.

How about monetary issues? Federal Reserve policy has completely lost domestic effect. Cuts in interest rates on September 17 had no discernible impact on the largest one-week decline in stock prices since 1933 and also none on economic activity. In wartime the Federal Reserve plays very little role; it must simply bring down long-term bond rates and hold them down. But even then, wartime monetary policy runs into a contradiction: It is inconsistent with a stable dollar, openly traded.

Here, the analogy to World War II mobilization is also misleading. Before World War II, the United States was the world's creditor nation; it enjoyed energy self-sufficiency and did not run a large trade deficit. None of these conditions now hold. As a result, a high-order Keynesian response will have global financial repercussions. To finance a major military or domestic economic effort, or both, risks driving down the dollar on world capital markets.

Lower interest rates worldwide after September 11 have kept the dollar up. In the short run, the recession will cut imports and improve the trade account; oil and gas prices may well decline. But in a global slump falling exports will add to our miseries; moreover, oil supplies could be disrupted in a wider war. And imports will rise again if large-scale Keynesian policies take hold.

Any of these scenarios could gravely destabilize the dollar. The natural reaction of the Federal Reserve would then be to raise interest rates, deepening the slump. Indeed, the Fed's opposition to economic-stabilization efforts now may rest more on unacknowledged dollar fears than on anything else.

What is to be done about this risk? The old reality in global finance is that debtors cannot run wars -- or economic-recovery programs -- without the organized assistance of their friends and allies. This, in turn, requires our commitment to a more stable and successful global financial system afterward.


A new and more just and stable
global financial order will have to
emerge from the present crisis.
The further reality is that the United States needs the sustained support of the world community for diplomatic, intelligence, and military purposes. This cannot be assumed to come for free -- especially not from countries that have not benefited at all from the modern global order. A new and more just and stable global financial order will therefore have to emerge from the present crisis or we will eventually become mired indefinitely in fruitless and unending military struggles, with fewer and fewer reliable allies.

The modern system of floating exchange rates and unregulated international capital markets is only 30 years old. It may very well now prove unable to support a return to prosperity in the United States. This being so, planning for a transition toward a more stable system should begin soon; we may need to fix parities with the euro, yen, and sterling before long. And comprehensive debt relief for cooperating countries -- Pakistan, to begin with -- is needed now, as a down payment on a system of stable development finance after this conflict.

Finally, there is compelling reason to examine the structural sources of the U.S. trade position. Oil is a major factor; cars are a larger factor still. Reconstruction of our transportation networks and housing patterns so that they rely far less heavily on oil and on automobiles (and on airlines) may be the necessary domestic adjunct of real security abroad. A major national initiative in transportation and urban housing, planned now and launched soon, would also help absorb resources presently being released into unemployment by the private sector.

These are the first steps. If widespread unemployment or inflation cannot be avoided by preemptive means, then the entire experience of the New Deal and the war economy will seem pertinent once again.

</font>
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
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Post#162 at 10-19-2001 01:49 PM by [at joined #posts ]
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On 2001-10-19 11:45, madscientist wrote:
Economic Crisis ahead?

<font color="blue">
A WARTIME ECONOMY...
...But without the Usual Wartime Stimulus?

In a war economy, the public obligation is to do what is necessary: to support the military effort, to protect and defend the home territory, to stabilize the economy itself, and, especially, to maintain the physical well-being, solidarity, and morale of the people. These may not be easy tasks in the months ahead.
</font>
Robert, interesting citation. Where is it from?







Post#163 at 10-19-2001 02:39 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er







Post#164 at 10-25-2001 01:30 AM by pindiespace [at Pete '56 (indiespace.com) joined Jul 2001 #posts 165]
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In the words of Ben Stein in the September 24th issue of Barron?s: "There is a psychiatric disorder called magical thinking that includes the belief that by following certain superstitions, or just by wishing, logically impossible effects will follow. Magical thinking often also involves a general dream-like, child-like belief in omnipotence?. [Examples include] Believing that the gravity of money has been suspended. Imagining that companies without any earnings or prospects for earnings can have valuations in the hundreds of billions of dollars. Admiring companies with interesting names but no possibility of returning any earnings to their shareholders. Thinking that all humans and investment history has been superseded by one invention and that all modes of investment valuation hitherto are obsolete?. The magic box [CNBC] promotes magical thinking: Believing that men and women with zero training in finance who happen to be in front of a camera know more than persons who do have training and experience?. There is no comparison or connection between the incredible evil that brought us the mass killings of last week and the phenomenon of the stock bubble of the past several years. But there is a very direct connection between the extraordinary magical thinking and the carelessness that led us as a nation to fall victim to both. We simply stopped thinking logically or sensibly."







Post#165 at 10-26-2001 02:32 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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Why urging people to spend is wrong.

http://www.tompaine.com/opinion/2001/10/24/1.html

<font color="blue">
<center>HEED NOT THE CALLS OF THE CONSUMERS-IN-CHIEF</center>

The September 11th tragedy has been a gut check for Americans. In one stunning instant, our priorities snapped into focus. We reached out to family and friends for reassurance and stability. We resolved to try to make things better. Acts of astonishing charity, kindness and heroism were commonplace. But to some, it wasn't enough.

In the aftermath of September 11th, we're told it's not enough to give till it hurts. We're now supposed to shop till we drop. President George W. Bush, Mayor Rudy Giuliani and former President Bill Clinton have morphed into consumers-in-chief, making highly publicized forays into malls and department stores, urging us all to buy something, anything, to aid the economic recovery.

Anything less, we are told, is unpatriotic. Yet there's something very unsettling about being asked to stuff ourselves to keep the economy humming and help fight terrorism. Certainly it stands in stark contrast to calls to conserve resources during World War II.

At a time of severe economic uncertainty, does it make any sense at all to urge Americans to spend beyond their means? Personal debt and bankruptcies are at record highs, while personal savings rates hover around one percent, the lowest level since the Great Depression. The fact is that the American people are simply in no position to do what's being asked of them.

The patriotic sales pitch is also painfully ironic. Most of the consuming that we're being encouraged to do, from buying interest-free V-8 pickup trucks to planning holiday air travel, adds to our disproportionate share of global energy consumption and makes us increasingly dependent on oil.

American consumers cannot solve this crisis. So what can a loyal citizen do?

First, hold fast to our instincts. From coast to coast, Americans are now more firmly in touch with what really matters. The superficial self-gratification that so often dominates our culture has been temporarily cast aside, replaced by human authenticity and compassion. Let's not lose this unexpected -- and dearly paid-for -- dividend of the tragedy. Let's reach out to our friends, family, community, and support those in need. To secure a more connected, cohesive nation, let's spend less time keeping up with the Joneses, and more time taking care of them.

Second, let's be clear: there is no heroism in taking on financial stress and debt right now. There is enough fear to go around without staying awake at night worrying about being able to pay the credit card bills. If you cannot afford to spend, don't.

Third, those who have the means and want to help prop up the economy should be smart about what they buy. Seek out local goods and services that will help ensure the survival of small businesses. Shake hands with the person your purchases benefit. Now is also a great time to invest in energy saving goods -- washers, dryers, refrigerators, computers and cars with high energy efficiency ratings -- items that will provide some economic stimulus while reducing our dependence on fossil fuel.

Finally, take a good, hard look at the way our economy is structured, and help make some fundamental changes. Our leaders are exhorting us to buy -- in part to bolster sagging corporate profits and in part because the economy indeed is too dependent on consumer spending.

Yet our oil-dependent consumerism is a root cause of emerging global conflicts that could wreak further havoc in the future. An economy dependent on financially strapped consumers and finite fossil fuel is not even remotely sustainable. Right now, the fear and insecurity is palpable. But it doesn't have to be this way.

The good news is that the average American consumer can play a large part in solving these problems. By focusing on our true priorities, living within our means, targeting our spending wisely and weaning ourselves from oil, we can show our neighbors, our leaders and the rest of the world a level of patriotism and humanity that we all can agree on.
</font>
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
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Post#166 at 10-26-2001 07:34 PM by alan [at joined Sep 2001 #posts 268]
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Good article. It sounds as if the American people are displaying better common sense than the leaders are in regards to the new economic realities of post-911.
It makes me think of that bumper sticker that says "If the people lead, the leaders will follow." We can certainly hope so.
One of our local talk radio stations [Seattle] had a long segment this afternoon on the subject that people just aren't spending money, and that those who are spending much of anything are buying home entertainment items because nobody is going out very much.
I think that its an almost instinctual response to danger and uncertainty, all the little creatures know better than to leave their burrows. Our political leaders are, as usual, the last ones to figure it out.







Post#167 at 10-27-2001 12:27 PM by Brian Rush [at California joined Jul 2001 #posts 12,392]
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Here's one passage in a generally splendid piece that meets my disagreement:


Our leaders are exhorting us to buy -- in part to bolster sagging corporate profits and in part because the economy indeed is too dependent on consumer spending.

Every industrial economy is always one hundred percent dependent, in final analysis, on consumer spending. No matter what other spending occurs along the way -- producer investment, government spending, etc. -- the bottom line is whether the goods and services that the investment produces or the government spending facilitates can be sold to consumers.


Thus, the suggestion that the economy is "too dependent on consumer spending" is without meaning. What we can say, though, is that the economy is dependent on an inadequate consumer base. There are too few people in the world with enough money to spend to justify the level of investment that's been undertaken in recent years.


Which, of course, is exactly the sitution that led to the Great Depression in the last Crisis.







Post#168 at 10-27-2001 04:25 PM by [at joined #posts ]
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Subject: Dis-savings.

What's really wrong is the savings rate. We have a negative savings rate. Any aggregate borrowing in excess of net existing savings is inflationary, which causes even MORE borrowing, in other words an inflationary spiral. When eveyone is borrowed up to their credit limits and can't borrow any more then we go into a DEFLATIONARY spiral. Which is what we may be in now. We'll have to wait and see. The future all depends on whether Mr. Greenspan's credit creation machine is busted or not.







Post#169 at 10-30-2001 12:46 PM by Mr. Reed [at Intersection of History joined Jun 2001 #posts 4,376]
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"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er







Post#170 at 11-02-2001 12:03 AM by [at joined #posts ]
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Subject: Only 250 Basis Points 'Till Christmas

Well our ol' buddy Al the Counterfeiter is going to lower interest rates again next week. The rumor is he'll drop by 50 basis points instead of 25. Why dosn't he just shoot the whole deal and drop to zero? The Japanese have essentially zero interest rates and it has done precisely nothing to help their economy. I suppose he wants to save some ammo for next year when things REALLY get tough.

GDP growth has turned negative. This indicates some deflation of the CPI Bubble. The word is that the price of an average house has also declined. This indicates some deflation in the Real Estate Bubble. Of course we have had considerable deflation in the Stock Market Bubble. It's anyone's guess as to how far this will go and whether we are in for another Depression.







Post#171 at 11-05-2001 03:52 PM by [at joined #posts ]
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Subject: Deflation.

Financial writer Bill Bonner agrees with me that Deflation has set in:
http://www.dailyreckoning.com./







Post#172 at 11-05-2001 11:33 PM by enjolras [at Santa Barbara, CA joined Sep 2001 #posts 174]
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mid boom lulls are often characterized by a mild deflationary period since they are generally disinflationary in nature anyway.

also, the primary reason that japan's attempts to stimulate their economy through a zero interest rate policy has not succeeded is that even though interest rates there may be zero the monetary base has not grown. in the u.s. on the other hand, if i correctly recall the last set of numbers i saw, the monetary base is now growing at double digit annual rates. this is, i believe, greater than the growth rate in the monetary base that we saw in 1999 that gave us the most explosive part of the bubble that we saw in nasdaq. it was only when the fed put the brakes on this growth after seeing that there was no Y2K crisis that the markets began to fall apart. this is why i contend that the next few years in the u.s. will actually be prosperous ones both for the economy and stock prices.

furthermore, i find it hard to understand why anyone can expect any significant deflation to occur in a global monetary system that is now an entirely fiat based system. does it not seem logical that if such a deflation were to occur to any significant degree that the governments of the world would just start printing money thus setting off a massive wave of inflation? since the mid 70s we have been in a true "new era" in this regard.

as long as the public retains its faith in the current monetary system this will keep general stock valuations at levels that would have been considered overvalued when compared to pre 1970 valuations before nixon finally closed the gold window for good. but when that faith begins to wane then i suspect we will find the stock markets of the world and the global economy in a situation somewhat akin to a wile e. coyote cartoon where he has run off the cliff but until he looks down he just keeps on going. but when he looks down......pheeeeewwwww!splat! then and only then you will see valuations that will make pre 1970 valuations look high! but that is probably a good 20 years away in my opinion.







Post#173 at 11-06-2001 07:15 AM by Rain Man [at Bendigo, Australia joined Jun 2001 #posts 1,303]
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On 2001-11-05 12:52, Robert wrote:
Subject: Deflation.

Financial writer Bill Bonner agrees with me that Deflation has set in:
http://www.dailyreckoning.com./
I think deflation might be starting in Australia, the latest inflation figures were so low, that some prices actually dropped in value. The average inflation rate now is near zero.

<font size=-1>[ This Message was edited by: Tristan Jones on 2001-11-06 04:15 ]</font>







Post#174 at 11-06-2001 11:08 PM by [at joined #posts ]
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Subject: Only 200 Basis Points Left Til Christmas

Well, Big Al did it again. The Fed funds rate is now 2%. Since CPI inflation is now about 2.75% this means Al is giving away money for free (2%-2.75%= -.75%). Real interest rates are now negative. Of course Wall Street partied just like it has for every one of the preceeding nine rate cuts. But how long will it last? As I've said over and over again the problem is TOO MUCH DEBT. How will MORE DEBT do anything but create a larger problem in the long run?

Al obviously wants to return to the glory days of the 90's and reignite the Bull Market. Somehow I doubt if that will happen if the previous nine rate cuts didn't do the trick.

At this rate Al has four more half-a-point rate cuts left in his pistol. Let's hope he finally hits the target before he runs out of ammo.







Post#175 at 11-07-2001 12:30 AM by [at joined #posts ]
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11-07-2001, 12:30 AM #175
Guest

Gee, and I can remember one, Robert, declaring 'This ain't it' on September 11, 2001.

Well, if the bulls are gone (and not because of 911, as you have spoken your highness), then where shall we sheep go, Mr. Robert? Into, dare I say it, DEPRESSION?

You are become a mumbo jumbo of pure nonsense, Mr. Robert. I often see where your mouth is, but I often wonder where your money is.

If you have any, that is. :smile:
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