Posted on 06/29/2009 10:55:43 PM PDT by Chances Are
I don't know if it's safe to copy this newsletter, but the excerpt below pretty much sums it up.
"Bottom line: The first quarter brought the greatest credit collapse of all time."
(Excerpt) Read more at moneyandmarkets.com ...
I actually first found this data on MISH'S World Economic Trend Analysis, and it pointed me to Weiss' newsletter.
This is a Martin D. Weiss publication, and the article will direct you to the Fed's Flow of Funds report (PDF). It's worth your while, I believe, to check it out and read it.
This analysis is quite good, quite revealing, and quite sobering, and reinforces my belief we are enduring a classic deflation that is truly one for the ages.
In short, Obama's Surge, which some predict will lead to a massive hyperinflation, is running against a massive credit collapse that is only going to get worse as unemployment rises and credit card and housing defaults multiply.
This is the classic enigma of the irresistable force (hyperinflation) versus the immovable object (deflation), and it sure looks like the immovable object isn't gong anywhere.
Strap yeselves in, Mates! Bumpy ride ahead!
CA....
I see a whole lot of change, but not much hope.
I saw this, too. And, I agree with your assessment.
As long as there are bad debts left and credit to dry up, and businesses to shut down, deflation. After that, with enough people unemployed and goods actually becoming scarce, inflation.
I have always said that the irresistible force beats the immovable object every time, because cosmically, there are no immovable objects.
[Strap yeselves in, Mates! Bumpy ride ahead! ]
I do some commercial real estate, and have had to become a bit of an economist to predict the future in commercial deals. Inflation, or deflation - pretty hard to predict in my opinion because it is a two variable system - money times velocity. Therefore, predicting which will give first, massive credit contraction leading to deflation or massive pumping leading to hyperinflation, may be the wrong way to analyse the problem. What we do know is that massive wealth destruction through government intervention with hopeless Keynsian nostrums is occurring.
So, bad things are going to happen for a long time. But I think you need to follow a two prong stagflation course. Get rid of debt, buy some gold, some commodities, move some money to other curriencies and in general hunker down. You just need to be as much off grid as possible, if for no other reason than to avoid the massive taxes in one form or another coming down the chute.
However, have you seen the amount of “bad debts”? There is huge excess to burn off in this economy, and that's going to take some time.
Then there is the problem of foreign debt, most notably the China problem.
Actually, what is happening (or rather, is going to happen) is the eventual destruction of the currency. Those who purport to lead us cannot be blind to that which they are doing. They must know full well what the consequences of their actions are going to be.
Of course, when you've assembled the motley crew that Obama has to “run” the country, this should come as no surprise.
My guess is that by late summer, we are going to be hit hard by several tsunamis all at once, and that's when the proverbial doo-doo will hit the fan.
We shall see.
Thanks for the post.
CA....
There are, if you look in the darkened corners of obstinate minds!
CA....
When in doubt you can always check JimRob's list. FWIW, Money and Markets is not on the list.
ping
Excellent article. Thanks for posting.
Proves once again, you cannot spend yourself out of debt. Our poor country can’t either.
I expect the shit to hit the fan later this summer or early fall. We’re just beginning to see the commercial real estate market collapse. And if you look hard you won’t find many financial fundamentals to keep the market at it’s current frothy level.
Sorry to be a gloom and doomer. But the famous “there” just isn’t very much anymore.
>>My guess is that by late summer, we are going to be hit hard by several tsunamis all at once, and that’s when the
>>proverbial doo-doo will hit the fan.
And next year, of course, is the “surprise” terrorist attack and the clampdown on dissent. This is why it is “now or never” on health care and cap and trade legislation.
Credit is dead.
Cash is king.
We are following Japan down the deflation rathole.
Those who were prudent and have more money than debt will prosper because their dollars are becoming more valuable. As it should be.
Others will demand govt largesse until the bond market says 'no mas' or the dollar crumbles or both. Leeches deserve no better.
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We will continue to follow Japan down the deflationary rathole until bad debt is written off instead of being transferred to taxpayers or hidden through govt-sanctioned accounting games.
I have been calling for debt write offs for three years on this board and been ridiculed until recently.
It seems hysterical (in the psychological, not comedic sense) to suggest it, but it seems that team 0bama is running the economy down on purpose, with purpose. They appear to be arrogant enough to believe that once they flatline it, they can revive it.
God help us.
So far.
Cash is king, until it's not worth anything. Hard commodities will be the coin of the realm, sooner rather than later.
I have been a deflation-skeptic for a while now, thinking just pure (potentially hyper-) inflation. But this scenario is looking more and more likely to me.
This is, of course, the "perfect storm" that promises to wipe everybody out, no matter what their financial position is because it is almost impossible to prepare for both deflation and inflation.
Buy food, ammo and gold has been my mantra for about a year.
They are trying to crash the system. Cloward/Piven calls for wrecking the status quo so the sheep will bleat for help.
Bloat and stock up on food and trade goods.
There is no way 0 is going to leave power willingly. I don't put it past him to create a terrorist event to lock down conservatives.
I'm not going to the camps.
I am more and more sympathetic to those buying silver quarters and dimes, for actual spending for food, when the stores won’t accept Fed Reserve Toilet Paper anymore.
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