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« The US Might be Better Off with a Global Currency | Main | Monday Should Break The Pattern »

Friday, January 29, 2010

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CNBC

Hey, you forgot our commentary!

"This is the most awesomely awesome piece of awesome to ever make its awesome way down the pike! If you don't buy stocks now, you're definitely not awesome! Look at our hot female anchors! Aren't they awesome? If you don't buy stocks, we're going to have to fire them, so buy stocks, dammit!"

Mamma Boom Boom

If I were a bull, I'd be scared-to-death. This is very unusual action.

Don't Be A Rookie

What is so "unusual" about current market action?
Sounds like you have not been around for a correction and selling the "good" news.

cloudslicer

Excellent links on the GDP, thanks.

If I'm not mistaken we have yet to get a 9-1 down day on a major index throughout the decline. Am I right on this?


Riordan

Great article in today's NYT about deflation in restaurant prices in Japan. Gave me a visceral feel for the mood of deflation and the difficulty of extracting a society from its reinforcing grip. What ends deflation? Clearly, printing money is not sufficient. It can even spook people into hoarding more. Is printing money necessary? I'm not sure. I think deflation ends as more swagger comes in. Maybe better said... When it becomes cool to spend a lot of money on something.

I am convinced deflation will take hold here. Obama, as well as many officials and corporate leaders, are sending two very different messages and only one will win out. One message: Spend, lend, borrow! Another message: Cut costs! Live frugally!

I remember the shellac-ing the CEO with the expensive wastebasket got. That told me deflation was the next big thing. Spending money on expensive wastebaskets is EXACTLY the sort of thing that was powering our economy. We thrived on discretionary purchases and the acquisition of rapidly depreciating assets. If it feels so good to berate (and hear someone berate) someone for purchasing an expensive wastebasket then the forces of deflation have been unleashed by history.

First, the berating is directed toward the Koslowskis and Wall Street fat cats. They will be scapegoated. They are the epitome of the mood we are leaving behind.

But then the berating will be directed at ourselves. We will self-flagellate for prior purchases and learn to love saving, self-denial, postponing purchases. It will be cool to be cheap.

Perigee

Riordan, before you become too convinced abour deflation based in Japan, read this.

http://www.lewrockwell.com/north/north799.html

yelnick

Riordon, the inordinate fear of deflation is a bit of a puzzle. History says it comes of two types: good and bad. Good is the steady drop in prices due to innovation & productivity (witness: HDTVs! PCs!). Bad is the 'swelling' of the currency, its increase in value. In itself, swelling is nothing to worry about, since in a floating exchange system currencies swell relative to others all the time. What makes the bad deflation troublesome and different than just moves in currency rates is it rewards creditors over debtors, and therefore accelerates debt write-offs; in other words, the swelling mixes up winners and losers domestically. That sort of bad deflation is self-correcting, since as the debt gets washed out the 'swelling' abates and the economy starts up again. Deflation is the cure, not the disease - the disease is too much debt. What I suppose makes central bankers rail against it is they are shown to be impotent.

I wrote about this two years ago here: http://yelnick.typepad.com/yelnick/2006/05/good_deflation_.html

Hockthefarm

Yelnick:

"Deflation is the cure, not the disease - the disease is too much debt."

Well said. Or as Dent would phrase it, deflation sews the seeds for the next boom.

The reality of deflation is that the entrenched lamprey in our society start to lose. The prime objective of government is to maintain the status quo. Or as Prechter puts it, "the gub is trend following, not a trend maker".

That's why FranklinDTwo took his baseball bat to the lower middle class on Wednesday, stating that he was artificially holding house prices up by taking on massive amounts of debt, so that hopefully the hard working lower middle class (ya the ones trying to save up a down payment and make reasonable decisions regarding home ownership) would never be able to purchase a home.

Second, FDTwo thinks government is everything. Nuff said there. If you didn't pick that up in his throne speech, you weren't listening.

The stakes for the country are getting very high. Barring a third party, let's just hope the Republicans don't try and serve up another retard.

Hock

Anon

Yelnick, this gentleman echoes a number of your sentiments.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/1/30_Jim_Rickards.html

Mamma Boom Boom

What happened to all those 'in-your-face' bulls that had been hanging out here for the past several months?

Did they lose their conviction?

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