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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: GST who wrote (88483)11/5/2007 9:42:02 PM
From: John Vosilla  Read Replies (1) of 110194
 
'Living standards in the US will on average go down and we will buy less -- anybody who has ever lived in a "poor" country will easily explain that when you are poor you don't automatically find people rushing in to sell you things at a discount. What we have implicitly assumed is that as we grow poorer in relative terms, people in other countries will find new ways to subsidize our living standards -- don't hold your breath. People in other countries are doing business with each other -- they have hundreds of millions of their own people to feed and to be clothed and housed and transported and educated -- they have their own markets and they have their own money. Wherever you live, drive to the worst part of town and look around -- do you see gas being sold at a lower price there? Do you see milk being sold at a lower price there? Do you think that somebody who is broke gets a lower interest rate? We have been subsidized these many years -- the subsidies are over.'

Awesome post. We have already experienced severe deflationary pressures from the housing bust on a micro level for a good two years already yet everything else keeps going up anyway. The parts of FL down over 50% you don't get any discount on your food, medical or gas bill.. Those of us who see the attempts to plug the gapping holes in the credit contraction and housing crash as fueling further inflationary pressures on the back end of all this are true visionaries.. Certainly the next 6-12 months is the last gasp for the deflation/depression crowd in my view.. Their next hope would on the back end of this cycle once interest rates skyrocket along with metals to incredible heights like in 1980. That could be a very long time..
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