i think you covered her presentation well...
as to the 'stag-deflation' and forced selling, i see that point as well, but i would add the 'forced selling' seems to be extended to just about everything, not just financial assets...so another word for that is deflation<g>
the price cuts i'm seeing on everything from computers to cell phones to clothes to energy efficient bulbs (you know the ones they were selling for $5 apiece? just saw a 4pack of them for $2.44 at home depot) and even food (my grocery store hasn't technically lowered prices from last summer's runnup, but i see 'specials' on the products all the time, and the mother of all deflationary prices on consumables is of course energy.....
warren's point about the squeeze on the middle class, documented over the past 30 years ended with a RE bubble that they *thought* would save them, affording them discretionary purchases that the inflation in health care, education, taxes, otherwise would have precluded,since wages weren't keeping up....and as we all know, that bubble has blown up in their faces
and they're back to living week to week within their means (understanding that CC lines are being pulled back hard as well)....
this certainly does not bode well for business in this country, china, or any place else on the planet that relies on discretionary consumer spending
i think we do need a stimulus, but my idea of stimulus is enabling the solvent to refi their loans at 3 or 4 percent, and then perhaps some investment tax credit for small business, new SBA programs that allow business access to capital at cheap interest, very good terms, but ONLY to the businesses that are solvent.....throwing money at the insolvent is simply taking money out of the hands of the people who could be most productive and create jobs, i agree with denninger, we have to let the insolvent default, and concentrate our efforts on easing the financial strain on the rest of the 90% who continue to pay their bills under very adverse economic conditions |
