From Russia w/ Love (G):
deflation is about a destruction of confidence and lack of demand. People run to safety for investments. Protection of capital becomes the primary moptivation and not %return. That safety is not paper currency as every nation besides the US, Germany, and the Britain have found out recently. As the dollar continues to drop, and currency turmoil increase, people will move to gold. That is why I am bullish on gold. Gold mining stocks returned around 800% during the last deflationary period... the Great Depression.
As for Meltdown Mon, yes this is VERY possible, although it could limp along for another couple weeks. (I do find it interesting to note that the '87 crash occured the Mon after an options expiration???) It is difficult to peg a day or even a week that we will break to new lows, but I think things will break down fairly soon. The only thing I see post-poning a large decline would be an IMMEDIATE rate cut, and that would only give us a couple months. I do like how all the long time bears both here on SI and bearish strategists (except Barton Biggs) have suddenly turned bullish... great sell signal!! Again, I feel sure we're going lower soon. How we get there is irrelevant.
Just take a look at NKE's results to see how quickly the world economy is bouncing back... LOL!! Has anyone else noticed all the layoffs coming out of US co's as their margins are squeazed? My question for the aggregate of these co's is... if people are loosing their jobs, who will buy your products? The Asians won't and the S. Americans sure won't either. This is how the problems that started in Asia a yr ago will slowly work their way thru the economy.
-Lucretius |
