Deflation is now conventional wisdom [okay, that's a slight stretch]. Here is Mike Shedlock laying out the case. globaleconomicanalysis.blogspot.com
An excellent review of the situation.
As a participant in the game, with a Tonka Truckload of US$ waiting for "the price is right" to escape from Big Ben's fiat fiefdom into real assets, I'm ogling various escape routes and assets to buy but so far have not spotted anything which looks like a bargain [other than Qualcomm Incorporated which I have a lot of already].
Warren Buffett has lunged at Wells Fargo and whatnot to no good effect so far. General Electric continues to be pounded. NZ$ remains too high at US51c. Gold was tempting but the in and out costs, storage and hassle are a problem - plus it seems to have its own little bubble of wild-eyed acolytes.
Yes, lots of investments are cheaper than they were, but their profitability isn't looking good.
There does seem to be a possibility of deflationary cascading implosion beyond the black-scholes event horizon as I have worried since May 1999. But there has been over two years of market clearing since the big crunch began so a lot of work has been done without collapse. Each month that goes by without catastrophe reduces the likelihood that there will be implosion.
Unemployment is only up to levels sufficient to make people realize they have to work for a living rather than just be paid a fortune, leverage that into a mansion, and retire on stock options after a couple of years of small effort. They'll holiday at home by a lake in a tent instead of in Paris or Las Vegas. They'll ditch the monster SUV and learn the joys of walking or bicycling. Roaring down a freeway for 40 miles to scoff more calories at a theme restaurant will start to seem silly. Poaching an egg at home and having it on wholemeal bread with tomato will make sense.
They will need to buy an HTC Magic CDMA/OFDM powered cyberphone to remain connected [or similar device] for job opportunities, customer contact, general communications and information.
Mqurice |
