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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 414.48+0.7%Jan 9 4:00 PM EST
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To: elmatador who wrote (108166)10/29/2014 11:47:55 AM
From: Elroy Jetson1 Recommendation

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Hawkmoon

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Deflation will be deadly for Nestlé foods. Since WW-II the company is what investment bankers would call a "roll-up".

Nestlé has used funding from Swiss banks to purchase a huge number of food companies all over the world.

Until now, this has been a very safe strategy as sales and profits in the non-luxury manufactured food sector remain very stable regardless of economic conditions. Initially during this deflationary period Nestlé has benefited as commodity food costs have declined.

Now Nestlé itself is losing the ability to maintain prices given competition.

This means less revenue and profits will be available to service their debt to their Swiss banks.

If global deflation really takes hold, Nestlé will become insolvent and cannot recover, even through asset sales of the companies they have previously acquired, as their deflated sales prices will be less than the amount of debt assumed to acquire them.

It's back to the 1930s, unless Germany allows the European Central Bank to proceed with Quantitative Easing.
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