Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (53580)	2/13/2006 1:55:25 AM
From: kris b	Read Replies (1) \| Respond to of 110194

"Unless the global economy goes back to Stone Age economics (which I don't expect, or even 50% GDP drops, probably more like 10%), or there are large population depletions (avian flu?), there is a high degree of price inelasticity here." GDP dropped by 50% in 1929-1933 period. Did the world go back to the Stone Age economics? No. "In the 20-30s, there was a great deal of overproduction in the US agricultural system and speculation in farms (one of the Bubbles then." Today, we have overproduction and speculation in everything, therefore pain of correcting of all of this will be that much greater. "Today you see resource companies slow to expand, and engaging more in financial dealings (stock buybacks, etc), rather than overproduct" With GDP contracting by 50% demand will evaporate and companies won't have to expand. They will be going out of business because of lack of demand for their commodities.. "Not sure how you cut the wages of folks already making only $10-15 a day much, even in a Bust" Labour arbitrage will not cause decline of wages for folks making $10-15 a day in China or India. The law of the lowest common denominator will force labour in developed countries (US, Europe, Canada, etc) to work for $10-15 a day or close to it. If they don't anything that can be outsourced will be moved to Asia leaving us with massive unemployment. I don't think that flipping houses or shuffling paper will fill the void.