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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: THE ANT who wrote (43788)	12/12/2008 10:30:19 AM
From: Haim R. Branisteanu	Respond to of 217771

Haim, I remember in Israel you told me you thought the money supply might suddenly gain traction(velocity go up I guess)and assets rise. True but insofar it did not – money is still going into “mattresses” and not recycled into economy –no one is spending or investing in new projects except the minimum – most are retracting investments – there fore even with printing presses at high speed the velocity of money is trending lower – therefore no real impact on asset prices, but to the contrary until historic ratio stabilization. The problem is that asset values are largely controlled by credit availability not just now but in the medium term also. Thus, even if the government says dont worry we will keep this money there long term do you think they will in an inflation spike? Inflation spike is unavoidable, IMHO at present time. No one including the FED knows when a sustainable spending spree will ensue, drawn on the money on the sidelines as a result of the FED/CB’s actions. I do not think that any one can predict the timing as it will be completely a psychological effect which will reflect the perceived certainty and financial safety The long term credit to GDP ratio determines asset values. We all thought (I felt it was remotely possible) that the new financial vehicles/developments might of been a super glue which would hold together credit at record levels of GDP. When this turned out to be smoke and mirrors and it appears credit to GDP will return to the old ratio then all asset values have to adjust. true but at the same time the FED must drain funds from the economy concomitant with the improvement of the perception on asset prices. If real price expectations will change – meaning price will move higher – “lets buy now before it is more expensive” – velocity of money may recover faster than the FED will drain funds That is why banks dont lend and we will not borrow. That is the right thing to do. Next, asset adjustment down has increased asset yield and if one bought assets without debt it would not be as bad. Presently true The problem is most assets bought on credit. Finally, something I dont hear talked about much, as asset yield has increased, if they were not bought on credit and if they need not be sold in retirement then a retiree need not worry. True live on interest/dividend /cash flow if there is any – and this is why I oppose low interest rates The problem is that most people will be using both the yield and selling down assets to live into retirement. This is where they get hurt. True A unit of labor has just gone up at least 2X relative to assets (due to credit bubble burst as it was smoke and mirrors and not a paradigm shift) How are the retirees going to pay those youngsters to take care of them? Savings goes up and USA consumption glutton goes cold turkey. First labor cost and asset prices must get back into historic balance, best reflected by let say home prices. At some point the balance will tip into more spending due to higher savings and need to spend to maintain normal day to day functioning – e.g. farmers will be able to buy cheaper feed which will enable them to sell cheaper milk eggs and meat and still make a profit to buy a new cheaper tractor etc. – which will generate more workplaces and more income and more spending – so the first is arriving at the economic balance point, stabilize save and then spend. Keep in mind reasonable savings and a workplace gives you the sense of financial security. The trick is that all this should evolve slowly and give the CB’s the time to drain liquidity – a process which I do not think that they are so smart to master – therefore we may witness a boom and boost cycle and only after that a prolonged stable recovery IF people will act reasonably On a global view it is my opinion that we may succeed if no hostilities will emerge around the globe in due time, a situation I question due to the present aspiration of Putin / Chaves and all those others of their ilk.

To: THE ANT who wrote (43788)	12/16/2008 1:54:30 PM
From: elmatador	Respond to of 217771

Brazil’s central bank may reduce interest rates by 50 basis points at each of its next four meetings, Morgan Stanley said in a report today. Previously it expected a total of 100 basis points cut by the end of 2009, beginning in the third quarter. bloomberg.com Industry slammed into the brakes. CB needs to soften its stand. Money will flow from fixed to variable. Real estate will be boosted real good. Increase 15% (about 8.5% in real terms) 2008. Curitiba has legs. Still much lower than comparable other cities.