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Non-Tech : Deflation -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (347)	3/31/2007 4:42:17 PM
From: Worswick	Read Replies (1) \| Respond to of 621

Delfation and Derivatives — and real estate. Darth Vaders Revenge On the subject of deflation there are only two authors I know of who have written books on deflation. –- contrasted to literally hundreds who have written on inflation. These authors are Robert Prechter & Gary Shilling. The two of these men have over 70 years of combined “out of the box” financial thinking between them. They are the premier unswerving -if not much taken seriously by “mainstream” economists - advocats of deflationist theories. As the late C.V. Meyers, an early deflationist said – “All debt must be repaid by either the person who borrowed the money or the person who lent it”. This has seemed to me to be an absolute in economics which is often overlooked. Moreover, studying the Japanese model of deflation …. when people simply refuse to go into more debt and to consume or buy things …. no matter what the stimulation by ….Mr. Bernake or anyone else people will simply refuse to borrow to augment already crippled assets. In Japan the stimulation of the Japanese government in building billion dollar bridges to nowhere and “stimulating” public works projects … did not even work. The banks were still crippled by huge broken assets held on their books while people still refused to borrow. Crippled city governments were renting out 4/5th’s of their public spaces for rent to keep going. The booger in the wood pile, however, is not consumer borrowing or corporate debt, or real estate borrowing but “derivative instruments” and hedge funds which probably will implode in the center of our financial system like financial Hydrogen bombs. The current world wide abundance of “derivative instruments” is something in excess of $375 trillion, and perhaps more: or, 10X to 15X the world GNP. So. Write off the banks. Mr. Bernake will be struggling mightily to liquefy a world without cash money…. forget ramping up the consumer to buy more “stuff”; forget real estate; forget collectibles; forget gold (you can’t take your gold bar to the supermarket and get bread nor beans). We are well cooked. … and over the last too many decades I have come to expect the “exogenous event” (the accident) to be a larger determinant of human history than all the well meaning government bureaucrats, and bankers, and insurance salesmen and real estate shils all plodding away in their linear world. Think about this one fact: When there is no money how will the government pay the 43% of the people employed by the government in one way or another? Next, think about all the corporate pension funds,then state and government funds invested in one way or another in the stock market. OOOOOOPPPPS. Military pensions $50 billion and counting each year, etc. etc. Remember the bonus marchers? Unfortunately, the annual world economy is approximately $30 trillion. Worldwide interest rates run around 3% - or $1 trillion total worldwide interest. Therefore, the US trade deficit ($800billion) currently consumes virtually all the interest earned by all investors world wide.” The world runs on cash. Not investment. I was born in California … and by the time I was 20 I watched 3 real estate bubbles get buggered and burst... always with the same result. Broken dreams. Strange that people can't get their head around the idea that all world class credit bubbles end in.... MASSIVE DEFLATION. Hey, who is going to buy “the stuff”? .... when 4.5% of the world's population (America) runs out of cash? Isn’t it kind of strange and marvelous that 95% of the world (that does not much like us now, but hey maybe that is another story) has depended upon the golden 4.5% in the Us of A. God bless us. Tattoo this on your chest. “The world runs on cash. Not investment”. A Quiz: What is it that everyone in America has? Answer: Debt. What is it that no one has in America? Ready cash,as they used to say in the quaint old days of the 19th century... during previous financial busts and episodes of over extened dreams and credit. Best to you Maurice. Good work!! Clark NB I can't help noting in passing that the Blackstone offering - if you can deciper the hidden codes of the 300 page offering - says that they made $7.75 billion last year. End of the cycle numbers. Amazing numbers.