Depression in the USA - Deflation verus Inflation

[tricha]

why the massive BLACK headlines???

strange stuff


most have been saying the US has been in some measure of recession for the whole year

Does 24x bold make it any worse for readers?

i like to add a little bit of colour, but taht otpion seems to be miscing. Year, no, more like the middle of last August.

[tricha]

ARE WE WITNESSING THE SLOW DEATH OF THE AMERICAN DREAM?
by Kevin Kerr

The world keeps turning and the resources get used up. It’s really quite simple.

Despite that fact, the debates rage over Peak Oil, Peak Food and peak everything else. It’s about as sensible as rearranging deck chairs on the Titanic. So the “experts” continue to debate whether or not resources are running low. But the evidence is pretty clear, at least to this trader.

In the past year, we have seen the oil and agriculture markets explode. And this could be just the beginning of the rally, not the end, as some would have you believe. Personally, I think we are about halfway to the new top for many commodities. That means $200 oil (easily) and gold at $1,500-2,000. The agriculture markets have even further to go, in my opinion.

Key commodities are becoming more and more scarce. So we can expect to see more suffering in the poorest countries first. Then the economic impact will work its way up the food chain (no pun intended).

The facts are fairly grim if we look at them closely. There is going to be less of everything. Yet there will be more people who want those things. Let’s face it – wars have been fought over far less.

In her famous book, On Death and Dying , Elisabeth Kubler-Ross describes the stages of grief:

• Denial: “It can’t be happening”
• Anger: “Why me? It’s not fair”
• Bargaining: “Just let me live to see my children graduate”
• Depression: “I’m so sad, why bother with anything?”
• Acceptance: “It’s going to be OK.”

In my opinion, the American public is going through the stages of grief right now. Rising prices are just a market-based signal that we are losing our economic and resource abundance. As the American dream fades away, it’s like a death in the family.

Right now, I think we are between the stages of denial and anger. Ask yourself these questions: What do you think when you pull up to the fuel pump and have to pay $4 for a gallon of regular gas, or nearly $5 for a gallon of diesel? Or how about when you go to the supermarket and have to pay $4 for a gallon of “store brand” milk, or the same price for a loaf of “store brand” bread? Are your emotions between disbelief and anger? Are you saying to yourself, “Hey, what the heck is going on?” (I’m cleaning it up a bit because this is a family-friendly publication.)

I think folks mistakenly thought prosperity would go on forever.

Dinner is always fun until the waiter brings the check. Or as my colleague Byron King once said, “It’s easy to look rich as long as you don’t ever pay the bills.”

No sector has recently hit Americans in the wallet harder than energy. But even with those dramatic price increases, major changes are still not happening. We have seen a very small decrease in gasoline usage – only about 1% or so.

But while some travel may be down as costs have gone up, the numbers are not really dramatic. No, I am not pointing fingers. I live here too. If I looked at my own lifestyle, I couldn’t say that I am making radical adjustments, either.

We still like to drive our big SUVs. We still drive alone to work. Most people rarely take public transportation (if there is any). And we love to run our air conditioners full blast while watching the documentaries on global warming and dying polar bears on our 62-inch plasma TVs.

Yes, we like to grumble when we fill up those big SUVs, mostly because it’s easier to complain than make the tough changes that are needed. We feel entitled to keep living as we do. Hey, after all, we’ve earned it. Right?

Rather than make difficult choices, we are in that denial stage and buy the line from the government and media that all is well.

The facts and the fiction often get mixed up when discussing the issue of “Peak Everything.” Take the surging price of crude oil. Some people (including a lot of politicians) want to blame the traders and speculators. Other people blame farmers and corn-based ethanol. A lot of people blame OPEC. The list of culprits goes on ad infinitum.

The fact remains that it’s not just one reason or another that we are in this energy disaster; it’s actually all of these reasons and others. It’s a culmination of many years of poor energy policy, short-sighted planning (if you can even call it planning) and an overdose of arrogance that only superpowers can have.

It’s like a football team saying, “We’re No. 1 and will always be that way.” So the team stops training hard. Players quit working out and coming to practice. The coaches just relax and forget about recruiting or developing new talent. Nobody designs new plays or bothers to scout the opponents to see what they are up to. And then the team expects to go out into the world and bring home the trophy every year. “Hey, we deserve it. Right?”

Or go back to the analogy of the Titanic. The ship was state-of-the art. It was not “supposed” to be able to sink. But now as the water rushes in and the ship is dropping lower and lower into the sea, the cold water is hitting us all in the face. Now our lawmakers are scrambling to plug the holes, and it’s not working. The smart people (or maybe they were just lucky) are already in the lifeboats.

Only time will tell if the United States can actually move into the acceptance stage. But in the meantime, commodities will continue to dwindle.

Kevin Kerr
for The Daily Reckoning Australia

[Dr_Who]

Great read Tricha.

[Laxmi]

The latest US unemployment rate increased the most in over two decades. This is the bad omen that everyone was hoping would not manifest. This is most definitely a recession indicator if ever there was one.

The market has reacted in a knee jerk reaction to the much worse than expected numbers. The mighty US dollar is obviously seen as a poor bet at the moment. ‘Everyone’ is pouring their money into oil as a hedge. The rush is phenomenal and staggering. This latest hike is unprecedented in size. To put things into perspective for the average worker: 12 months ago, the price of oil was $64.77. The last few day’s price hike would have been a staggering 25% increase back then. In real terms, most workers income would have only increased 5% at best during the interval. In other words: Today’s price hike is hurting, and is going to hurt more unless the price of oil starts to fall dramatically very soon.

What to do?

[Huang Chung]

I'd happily trade places with the Yanks when it comes to filling the car with juice.

[STRAT]

OK guys and girls,
another bad night in the US tonight and the **** will hit the fan here tomorrow. But over the last year it seems to me we here on the ASX have been less and less, affected by the rallies and drops in American Markets. Im not suggesting for a moment we are becoming detached but we seem a little less connected. Im rather concerned right now about how much of a beating we are in for and which sectors will be hit the hardest.

Will Oil and alternative energy stocks survive unscathed? Oil is going up after all so surely oil companies must be doing better.

Would appreciate everyones thoughts on the immediate future? Whos poised to cash up, whos gonna ride it out and why

[tommy]

Hi STRAT,

When da sXXt does hit the fan, do not fight against the herd... just keep a close eye on trading volumes of the stocks that you are interested in to determine whether the change in price is a major turning point in investor/trader sentiment. No point in trying to "pick the bottom" when the US's bottom is about to fall off, hehehe


In the last couple of weeks, it has been too easy to make money, but things are changing now that political factors are starting to influence market sentiment, that is IMHO when all technical/fundamental analysis goes out the window: If Israel attacks Iran, all markets are gonna go nuts in a split second. But then again, that will also give rise to some opportunities...

I am betting that UCG sector will remain strong on the back of high oil prices BUT liquidity in the market is a major assumption here. If liquidity in the stock market dries up, it's time to run for the hills!

Note: I am 90% cash apart from CXYO which is in trading halt (fingers crossed) and under-the-carpet ISSO plus my beloved freebie BOW. Sold all other holdings and locked in profits on Thursday because I hate long weekends...

[shasta]

OK guys and girls,
another bad night in the US tonight and the **** will hit the fan here tomorrow. But over the last year it seems to me we here on the ASX have been less and affected by the rallies and drops in American Markets. Im not suggesting for a moment we are becoming detached but we seem a little less connected. Im rather concerned right now about how much of a beating we are in for and which sectors will be hit the hardest.

Will Oil and alternative energy stocks survive unscathed? Oil is going up after all so surely oil companies must be doing better.

Would appreciate everyones thoughts on the immediate future? Whos poised to cash up, whos gonna ride it out and why

I'm backing my diversity with energy stocks to hold up, or at least to rebound quickly...

In fact historically ADY goes up when the DOW goes down!

I'm not selling out of any stocks, as i think the DOW over-reacted & may have oversold some stocks in the panic.

Maybe a 100 point rise on the cards tonight?

[STRAT]

Thanks fellas

LOL, thats one "sell the lot" and one "sell none"

I was feeling about 50/50 on which way to go but now Im sure Im 50/50 on which way to go

Anyone else care to comment?

[shasta]

Thanks fellas

LOL, thats one "sell the lot" and one "sell none"

I was feeling about 50/50 on which way to go but now Im sure Im 50/50 on which way to go

Anyone else care to comment?

Just remember back to last August, & how quickly things rebounded...

Those with cash may find some bargins, but IMO its not the time to sell if your stocks have good fundamentals, or nearing production etc.