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Wall Street exec predictics Depression. THIS YEAR.
Posted May 21st, 2008 by gavination
output
Predicts stock market will lose 50-60% of its value in the next 12 months. Front page of Bloomberg.com
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The bigger question for me
Fortune Favors the Bold
is when will the inflation that was created by the Fed's "innovations" in March, make its way through to the marketplace? I origionally was thinking September, but given the fact that banks have been very hesistant to use much of their massive new borrowed reserves as collateral, it could be a bit more delayed. Any economists want to take a crack at it?
People on fixed incomes might say it's already happening.
___________
Lisa C.
http://www.women4ronpaul....
1 to 2 years
I don't agree with Milton Friedman on several issues, but he and his students did an enormous amount of empirical work on the question of how long it takes for expanded money supply to be reflected in general price increases. The answer they came up with, after studying inflation in numerous countries at different time periods, was 18 to 24 months.
I think you have to modify that answer with the comment that inflation-driven price increases may appear in different sectors of the economy at different times. So prices may rise in one area first (like housing or stocks of commodities) and spread to other areas later.
Also, as the public becomes aware of continuing inflation, I think the time shortens for it to be reflected in higher prices. So maybe a year for the newest batch to appear in higher prices.
Why
would the price inflation not appear in all sectors at the same time?
inflation is different then price increases
Fortune Favors the Bold
actually if the effects of inflation were universal at the exact same time, it really wouldn't be much of an issue. Ron Paul explains this in the Revolution: A Manifesto in the money chapter. In short, the well connected (big banks and their allied corporations) receive the money first, when, in the eyes of the public, its depreciation in value has not registered, thus inflating the information value of their (banks and corps) assets. Since the savings of people have lost their value before the general public has realized it, what you get is distortion in the information value of money (the relative value of assets or resources by which people base their decisions regarding economic activity), that allows for the first recipients of the newly created money to have a leg up on the general populace.
To put it in simple terms, let's say I magically created a trillion dollars for myself, and did absolutely nothing. I could buy houses, cars, heck, even whole companies and plunder their assets for myself. But eventually, the distortion in the money supply (I am not really worth a trillion dollars) means all the decisions made by those people who sold me their cars, houses, and companies, were really frickin bad decisions on their part. Since they basically just gave me something (in my hypothetical example, nearly everything) for nothing. Now, the first people who i bought this stuff from won't suffer the consequences, as the people who they buy stuff from with their "Magic money" won't realize what's happening. But eventually, the series of bad decisions will add up, and people will realize money is no longer as accurate a decision guider as they once thought. Hence, they will demand much, much more of it to make up for this. Depending on how the new money is distributed, this realization will manifest unevenly (hint, wages tend to be the last thing get increased)
That doesnt seem to explain why
price inflation would occur unevenly.
I understand that those who get the money first are able to extract wealth from everyone else, because it's a form of counterfeiting. But that still doesnt explain why prices would rise in one sector faster than another.
This is a very good point JohnGalt300
I believe that Acala, above, is correct about the timeframe of 1-2 years for the new money to work its way down and through the economy. My concern is that it will be too late to save things at that rate. We are experiencing higher food and energy costs right now. That means immediately higher prices at the same time we have recession like conditions, so basically a bit of stagflation while we wait for the money to make its way to people's wages. The problem compounds when considering how low the dollar is becoming for outside nations we consume from. This means higher import prices, another immediate price raising pressure. So the economy continues to threaten to lock up, and the Fed must try to cut rates for further rescue, but the dollar is already at all time lows... Not a good outlook at all in my opinion; cue in the hyperinflation.
It's like being
between a rock and a hard place!! They (the fed) have painted themselves (and this country) into a corner.
Where's the happy little tire swing?
gavination you can go to...
http://tinyurl.com/ and paste that long URL into the box, and then click makeurltiny button and presto!
heres your video link
http://tinyurl.com/4ls44r
Paper Ballots,Hand Counted At The Precinct Or Bust
thank you!
.
technically not possible
Fortune Favors the Bold
this year, by the gregorain calendar. Earliest we could technically be in depression would be next year.
Bear Funds
Come on, he wants people to think that so they put their money into his funds. These people are not better than people saying we have to invade Iran to stop the coming nuclear attack. He manages Bear funds people. He makes a living on the market going down. Even the number he gives is not that scary. 1.4 trillion double from 600 billion. Well the fed already has a few hundred billion of that on its roles now. Inflation is the only thing that can stop our economy. So I am not sold.
My views
We are not going to have a depression in the classic 1930s sense, with a sharp deflation in prices. Instead helicopter Bernanke has made it plain by both his words and actions that he is prepared to inflate his way out of any solvency crisis. This means lots of inflation. Eventually bond holders, tired of deeply negative real returns, will realize that Treasuries have long since ceased to be any sort of "safe haven". They will sell off, putting their money into commodities and more prudently managed currencies. I have to admit that I'm surprised it hasn't happened already. The Chinese and Japanese must enjoy losing money. When the sell off happens it will send long term interest rates to the moon, causing great distress to businesses that have to borrow money. It will also swell the deficits of both the federal and state governments as they have to devote more of their tax revenues to paying interest. Bernanke will respond by creating more money, fueling more inflation, higher interest rates, etc. Look at Zimbabwe today to see the end game. A depression, yes, but not like the 1930s. More like Weimer Germany.
It's not that
Fortune Favors the Bold
It's that both the Chinese and the Japanese realize if they stopped holding US debt, it would trigger a worldwide depression. It would hurt the Chinese Government too, since their elite have been rolling in the wealth doing the slave labor manufacturing for american corporations.
Well that's preferable to a depression
Bernanke did the right thing if the alternative is a depression.
That's kind of like saying
Fortune Favors the Bold
well, if the alternative is heroin withdrawal, I guess we better just keeping shooting heroin.
Well...
The only tool the Fed has is increase and decrease the money supply. Sure it would be great to get rid of the Fed, but until that happens Bernanke has to do one or the other. I think he did the right thing. So does the rest of the market.
That's Craziness
When is the last time the Fed Decreased the money supply. What they are doing may delay the depression, but it will only make it that much worse when it comes.
So you prefer a
a Great Depression II today, instead of a Great Depression II, say 50 years from now? I'm all for delaying a depression as long as possible, preferably until after I'm dead.
Yeah, real responsible
Yeah, real responsible outlook there, BillyDeeisNOTmylover! Yeah, let's keep delaying the inevitable, and make the problem orders of magnitude worse down the line. "Gimme mine, and to Hell with everyone else", right?
Once again, you display your dog-eat-dog, amoral, atomistic view of society. Remind me never to buy a house next to yours.
And let our children and grandchildren...
pay for our mismanagement?!?!?! Seems shortsighted to me.
Libera me, let the truth break, what my fears make--Leslie Phillips
Yep
I'm not going to sacrifice my well-being for future generations. I'm no altruist.
Glad you're all for screwing
Glad you're all for screwing over your kids. We aren't talking about 50 year delays. We are talking about month delays. Better start living it up for the time the Fed has given us.
Exactly, JohnGalt ---- and
Exactly, JohnGalt ---- and not just keep shooting heroin, but shooting MORE and MORE each time! Yeah, that's the ticket!
The idea that there is, or
The idea that there is, or can be, a trade-off between the strength of the currency and the strength of the economy is ridiculous, utterly false, and contradicted by every real-world example of the last seventy years --- the "Fiat Age".
By that idiotic , Keynesian pseudo-theory, Switzerland should be, and should have been for decades, the most impoverished nation on earth, and present-day Zimbabwe should be economically booming --- instead of importing food and experiencing 50% unemployment along with their 200,000% inflation.
That's not my position
I said that inflation, as long as it's not hyperinflation, is preferable to a depression. Do you prefer a depression? Inflation just amounts to a tax. We can live with that. The ideal thing would be to get rid of the Fed, but until that happens monetary policy is a tool that has to be employed in one direction or the other.
This is not a Keynesian position. Milton Friedman, the montarist, recommended in retrospect that the Fed increase the money supply to prevent the Great Depression.
Try This Link
Here is a link to the video.
(Edited for HTML instruction)
You should put it in an a href tag:
<a href="http://...">(text to display)</a>
This will make your link look like mine above.
gavination how about a decent link...like this
http://www.bloomberg.com/...
Paper Ballots,Hand Counted At The Precinct Or Bust
the link
the link was for a video. I'm not the best with computers.
Actually
He said within the next 12 to 24 months, but the message is very clear. The markets need to take a major correction to account for living beyond our means for too long.
12 months from now is 2009
24 months from now is 2010. Either way, it's not THIS YEAR (2008). I wish people would chill on the headline embellishment. It's not like we get paid for the number of times DP readers click on our posts. This "prediction" is pretty much in line with what most honest financial professionals (and accomplished amateurs) see coming our way. Have you all taken steps to protect yourselves?
Will people ignore the
truth?
The only ones who will loose are the workers who are now mandated to participate in a 401k, because, "they aren't smart enough to save", or is it so they can steel that little bit of money too by way of the markets?
It's like every other "bubble", the middle class pays and pays and continues to pay!
BTW, I cashed in my 401k last year and have control of my own investments!
Same with annuity this year! YOU must control your own money!
Help !!
I'm rolling over my entire 401 k into a IRA with a 5% guarantee. I've been losing 4% but am matched the first 6%. I really do not have any "safe" options in my 401k that aren't losing. I'm thinking it would be smart to get as much out of the stock market as possible. I am ready to retire in about 7 years. IRA's backed by the third largest insurance agency, good idea ???? I'm told these wont be available too much longer...
Please see my detailed post below
and when you review and read the L.E.A.P. website, pay attention to the benefits of WHOLE life insurance. You immediately create protection for your family; you build cash; you can borrow your own money at anytime (act as your own bank), and the returns are about 6% a year - no up and down returns with this plan.
NO, I don't sell insurance, just want you to check it out.
Would you go without car insurance? (I have $1k deductible, because when we have a minor fender bender, we don't report it because "they will raise our premium" - so why pay for something you will not use?
Would you go without home owners?
Then why would you not insure your most valuable asset - yourself!
You could divert the % of your 401k money over and above what is mandatory, and put it here for safety and growth - just another investment option as port of your personal portfolio.
OR
Open your own WCA (wealth contribution account) and use this money to make more money, then put it back, plus the profit or a % of the profit. (WCA is just a name I gave this savings account) It's about utilization, not just accumulation.
I have another savings account used for emergencies (should have six months living expenses saved in case of job loss, illness, etc. etc.)
Then, you could have one to save for vacations & or larger unexpected expenditures.
When you separate, you can manage your money better.
Many
Many thanks....
401k
how hard did you get hit when you cashed in?
I had a plan
however, YOU must weigh all your options and have your own plan.
Because of age, no penalty there.
I did it Jan.1st and did not allow them to with-hold taxes at that time, therefore, I had use of that money all year and three months the next year before the tax bill was due. It's about utilization, not accumulation. You can use and reuse your own money over and over again. I am privileged to work along like-minded people who do not live in fear of taking charge of your own life, money, and investments.
If you invest in an oil well, there are huge tax advantages, so you could cash in at any time during the year. But, the best and safest investment is in yourself.
You may want to check out this site for oil well investments and decide for yourself. These guys are great and know what they are doing. They have many wells waiting for investors. They are principle based and do not take money from "just anyone". So, there is some review of principles, and like Ron Paul supporters, support the Constitution. Our founding fathers discovered and set these timeless principles to prosperity.
http://www.brayconn.com/ offers mentoring programs,
We were raised, taught, and educated to believe certain myths about money and investing (public school for me and parents and grandparents who lived through the Depression). So, you must turn your brain on and think about the things you read at these sites.
http://www.leapsystems.co...
http://thereisnodollar.wo... - this is a new blog by a like-minded friend of mine (James aka thereisnodollar) trying to create value for those who are used to depending on others (ie:financial planners) to make their decisions. He is extremely intelligent, so read and re-read his words and THINK about them. I now blog on there too.
And this site...
http://www.killingsacredc...
It's all about a paradigm shift - move from living in fear and scarcity (as a consumer) and as a victim. (Victim = "it's not my fault" "but he told me to do this" "if only luck had been on my side" "but my husband/wife won't let me" 'he/she should have told me") to becoming a Producer. A consumer consumes more than he produces; a Producer produces more than he consumes, therefore creates value to share with others. Accountability and education is the key to success.
These next sites are all from the same person: (I've indirectly invested here too)
www.freecapitalist.com
www.rickkoerber.com
http://primer.freecapital...
EDUCATION EDUCATION EDUCATION!
No one can tell another WHAT to do, but can guide you to like-minded people and principles you can learn and utilize.