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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Kid Rock who wrote (23358)	9/17/2002 11:32:41 AM
From: TobagoJack	Respond to of 74559

Hi Kid Rock, I completely agree with the facts and views contained in the article, especially with <<''The pie is getting smaller,'' said Ho Lok-sang, head of the Economic Department at Lingnan University.>> This was my post describing deflation and pondering what to do: Message 16164944 “August 3rd, 2001 Hi DJ, Deflation is actually OK if one is positioned correctly, but financial planning in deflationary environment is not so easy, especially for the leveraged and for the J6P who bought expensive real estates. The price of food, housing, energy, services and money all decline, thus allowing some folks to get more bang for their dollar, yen and Euro. The folks who were not positioned correctly, with their high-price purchased housing, large mortgage and low cash level get pretty nervous. Their total asset, represented by stocks, and housing, decline; their mortgage and credit card debt stay constant, even as the service cost on these debt decreases. For companies, their revenues decline, wage bill stays sticky, and profits collapse, along with their share price. Banks suffer, because the asset value backing their capital and loan portfolio decrease, and loan portfolio stays constant, or decreases via loan defaults. Government revenue base decreases, and some may try to boost the tax rate in compensation, squeezing J6P and companies. Economies contract, because folks buy less, knowing it will be cheaper still later. The FED is correct in viewing deflation as the greater evil when compared to inflation, until and unless inflation starts taking off:0)” Hong Kong will flush out the foam and fizz of the 1990s bubble either by slow deflation of assets over a long time, or by rapid devaluation of currency over a moment: Message 18000164 But, at some point, folks will have over reacted, sent the asset prices too low. For example, the HK property development and holding companies will be bid lower and lower by folks working along current trend and fashion, forgetting that these companies hold vast ‘land banks’ at little or no cost all over HK’s countryside, and can build apartments and new towns at a profit regardless of current property values: Message 18000207 I believe that at the inflection point between growth and deflation, or stagnation and inflation, wealth preservation is of the first order importance. After a while, when the time is about right, buy assets of different flavors, real estates and hard assets in the case of deflation, treasury bills and stocks in the case of inflation, in anticipation of counter-cycle and political blowback. Chugs, Jay