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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: John Liu who wrote (6138)	9/3/1998 4:45:00 PM
From: Zeev Hed	Respond to of 9980

John, in a deflationary environment you do get a lot of bankruptcies. There is really no place to hide but in treasuries since interest rates decline. I think however that we will not have a deflation in the US, maybe a recession, so you could find solace in telephone companies and even in utilities. I also think that the integrated oil companies will have better refining and marketing margins, and they have been beaten a lot already, so these could also have better relative strength. Mind you, if the Dow goes to 6000 or so, there is nowhere to hide.

To: John Liu who wrote (6138)	9/3/1998 4:47:00 PM
From: E	Read Replies (1) \| Respond to of 9980

Anybody, is there some technical term for the situation in which asset values decline in practically every category at the same time-- equities, commodities, currencies, and more patchily, property? "Deflation" seems kind of unspecific.

To: John Liu who wrote (6138)	9/4/1998 1:45:00 PM
From: Worswick	Respond to of 9980

Yes. John there are great thngs that happen in a deflation. We get more government involvement in our lives. We get taken care of more. And, at the end we reduce the US goverment debt by a process of "moving the decimal point". That is, we take the National debt and we reduce it by 90%...by simply redenominating the currency. Thus, the $6 trillon becomes, almost magically, $600 billion. Of course, in order to scramble out of the deflationary hole we stumbled into we will have to have about $3 trillion old dollars put up by the government in the terms of loans, bailouts, etc. But in new dollars this will only be $300 billion. Will the new dollars be red, white or blue? Of course all this is only the indirect result of asset deflation. Imagine, you can again own a Cadillac or a mercedes for $4,000. Phone calls are $.025, candy bars... less than a penny. The big winner will be the hoarders of pennies which won't be changed. Got this?