Depression in the USA - Deflation verus Inflation

[bermuda]

sorry, but its not Lithium!

you ran out this morning

Sector,
If you are talking energy and GOLD, listen to what Tricha has to say....you may like to re-read this a few times.

[Laxmi]

I imagine that President Bush is praying a lot these days. (or he should be). High oil for the US is unlikely to come down if the US dollar keeps falling. Meanwhile the US dollar is not likely to improve unless the US economy proves that it is not in recession. (or America wins lotto and manages to get its spiralling debt under control by paying some of it back).

Meanwhile for the average American homeowner, he/she is feeling poorer. Everything costs more; especially food and energy. Wages are no longer keeping up with inflation, and worse; house prices are falling at a dramatic pace. Foreclosures are common and as a result some company shares are collapsing in price. This all adds up to the average American putting off spending at the moment while he takes stock of the situation. (especially the pensioners earning interest in the bank) This lack of spending is a major problem and risk for the US economy. Unfortunately it is also bad for the world economy, especially Japan, China, India and Europe. (not to mention Australasia)

Unfortunately this is all adding up to a classic self reinforcing economic loop of falling demand due to high prices, oversupply and subsequent falling prices. As prices fall due to oversupply, production is cut back and workers laid off at short notice. An atmosphere of doom and gloom starts to pervade through the air, replacing previous sentiments of optimism and trust. How low will prices go and for how long will prices stay depressed? More importantly; how many more panic liquidations are looming?

This all depends on the level of fallout from previous credit excesses. It would appear that just because you provide easy credit so as to fulfil a larger number of homeowner dreams; this does not mean necessarily that all credit will be repaid in full by those less creditable, regardless of any sign of faith to the contrary.

This is a lesson that is proving costly to us all. The consequences of credit excesses are staring us in the face. Will it be hyper inflation due to a printing press mania or a prolonged depression? You know my prediction. I think that I will hedge my bets.

[bermuda]

I dont have to listen to a nobody, Bermuda, you are a nobody too, I read this site, listen to lots of BS, and take what I can. Who are you both? nobodies really right.

Now and then I dont treat STer like a joke, but mostly I do

and you have to be dreaming that I am going to listen to someone that says Gerry Stolwyk has been right since 2001???? you what

No need to stick up for Tony now that you two have had a love in, I would rather play the devils advocate in your case, since you both are in love with the same things, it would be difficult for you to see outside your own bubbles

I can think for myself, thanks for your concern

Tony is far too schitzo for me, but amusing

Nice.

But please dont speak ill of the dead.

RIP Gerry.

[Packersoldkidney]

I'll sleep like a baby knowing I'm partly cashed up after selling my beloved ADY, the market is in no mood for gambling stocks or potentially multi baggers, period, it is past tense.
I'm sticking to gold and oil producers with little debt and cash flow or impending cash flow and huge upside and a little cash to weather the storm.

I am not bullish either on gold or oil. Investor sentiment on both is extremely high - close to a 100%. When that happens you know a peak is at hand - for who is there left to actually invest if most already have?

Gold in particular looks bearish to me - the classical view of oil is changing because of the supply- demand thing and history is now no guide with oil. I am surer of calling gold down than oil.

Would not surprise if the US $ found a bottom in the near future.

[stevo1]

oh Laxmi, I think its about time the US dropped a couple of countries off their GDP like the whole of Oz and NZ

Although the economies of countries like China and India are growing at an incredible rate, the US remains the nation with the highest GDP in the world – and by far: US GDP is projected to be $13,22 trillion (or $13.220 billion) in 2007, according to this source. That’s almost as much as the economies of the next four (Japan, Germany, China, UK) combined.

http://asecondhandconjecture.com/ind...-as-us-states/

Its seems a pity then that 70% of their GDP is made up in CONSUMPTION spending their way to increasing GDP.That woulnt look too good in a major RECESSION now will it

[tricha]

Sector,
If you are talking energy and GOLD, listen to what Tricha has to say....you may like to re-read this a few times.

I tried to edify him into reading a few good books Bermuda, he can not read, but hes one hell of a delinquent

[tricha]

I am not bullish either on gold or oil. Investor sentiment on both is extremely high - close to a 100%. When that happens you know a peak is at hand - for who is there left to actually invest if most already have?

Gold in particular looks bearish to me - the classical view of oil is changing because of the supply- demand thing and history is now no guide with oil. I am surer of calling gold down than oil.

Would not surprise if the US $ found a bottom in the near future.

Packersoldkidney - Where do you recommend we park our investments.?

I do not understand how the US can keep on lowering interest, would u loan them any money?
I am dam sure I wouldn't.

[Laxmi]

As it turns out; one day. A distinct pattern is appearing, The US FED announces a rescue package, the share markets stage remarkable multiyear one day recoveries and then the market falls again. This time the fall is around 300 points and it only took one day for the market to retreat.

The main culprit this time for the retreat is the dramatic fall in the price of gold.
http://www.forbes.com/feeds/ap/2008/...ap4795558.html
"Gold futures had their worst day in nearly two years Wednesday, beaten down after a smaller-than-expected interest rate cut bolstered the dollar and diminished the metal's appeal as a hedge against inflation. Other commodities also traded lower, with crude oil, silver, copper and agriculture futures all falling sharply as part of a broad commodities sell-off. Gold for April delivery plunged $59 to settle at $945.30 Wednesday on the New York Mercantile Exchange. The 5.9 percent decline was the largest one-day loss since June 2006. Gold soared to an all-time high of $1,033.90 Monday, following the Fed-approved bailout of Bear Stearns by JPMorgan Chase & Co."

Today could turn out to be a very costly day for some. A sudden spike downwards in commodity prices is going to bring with it a degree of panic for future traders who were long. The real test will occur at some time in the future when margin call time appears again with monotonous regularity. If prices recover then all will be well. If prices remain at these levels or lower; then panic will turn into fear. A hoard of cold hard speculator cash could disappear as a wave of panic selling begins in earnest.

[Packersoldkidney]

I am not bullish either on gold or oil. Investor sentiment on both is extremely high - close to a 100%. When that happens you know a peak is at hand - for who is there left to actually invest if most already have?

Gold in particular looks bearish to me - the classical view of oil is changing because of the supply- demand thing and history is now no guide with oil. I am surer of calling gold down than oil.

Would not surprise if the US $ found a bottom in the near future.

"Gold prices slid in their biggest one-day drop in nearly two years and oil posted its worst slide in seven months, weighed down by persistent worries about the US economy's health."

link

[Packersoldkidney]

Packersoldkidney - Where do you recommend we park our investments.?

I do not understand how the US can keep on lowering interest, would u loan them any money?
I am dam sure I wouldn't.

I'm in cash. If I were trading and my technical abilities were on a par with Arco's I would be looking for opportunities to play the volatility in the market, the rallies and dips this early in a bear market are a trader's dream.