professional wordpress themes

Martenson: Inflation, Deflation, Stagflation…

On August 10, 2010, in Economy, by Tim

Chris Martenson was on tech ticker the other day and, when asked whether we’ll see in-flation or de-flation in the period ahead he replies with a resounding “Yes”.

Says Martenson: “The Continuous Commodity Index is absolutely screaming inflation at this point in time over the past eight or nine year timeframe, but, at the same time, we’re seeing houses decline in price, we’re seeing a number of other things – asset prices – move lower, which, I think is what the Fed is most concerned about at this point in time. So, I think we’re going to see both”. He’s also convinced that a double-dip recession is imminent.

1 Comments
Leave a Comment

Tagged with: • •  

Is the Stock Market or Bond Market Right?

On August 6, 2010, in Bonds, Stocks, by Tim

Another item from Dow Jones, this one offering a few thoughts by Allen Mattich on the subject of whether the stock market or the bond market is correctly forecasting the future.

One thing is certain, they both can’t be right and, at some point in the not-too-distant future, stocks and bonds will stop rising together. What would really stump market analysts is if they both started falling together… Oh Dear… Maybe I shouldn’t have brought that up…

0 Comments
Leave a Comment

Tagged with: • •  

Misunderestimating Deflation

On July 26, 2010, in Banks, Economy, by Tim

Jon Hilsenrath files this report in the Wall Street Journal about the deflation that occurred almost 80 years ago in the U.S. and a similar bout of falling prices more recently in Japan.

The old bogeyman of deflation has re-emerged as a worry for the U.S. economy. Here’s something else to fret about: After studying more than a decade of deflation in Japan, economists have slowly realized they have no idea how it works.

Deflation is usually associated with a Great Depression-like drop in demand. Consumer prices, incomes and asset prices fall. Interest rates go to zero, as low as they can go. As prices and incomes fall, the cost to borrowers of servicing debt does not, sucking life out of the economy and pushing prices down further. A bad situation, in short, gets worse.

In 1932, U.S. consumer prices fell 10% and between 1929 and 1933 they fell 27% in all.
…
Economists don’t have good answers. “We don’t know how deflation works,” says Adam Posen, a member of the Bank of England’s monetary policy committee who has been studying Japan since 1997. “We don’t have a way of rationalizing steady, several-year flat deflation,” he says.s.

Whatever deflation is or does, Fed Chief Ben Bernanke plans to make sure it doesn’t happen here and, given how he’s managed to crank up the printing press over the last couple years, he should probably be taken at his word.

BTW – That graphic looks to be incorrect as the 1930s deflation is portrayed as a relatively modest affair when there were, in fact, double-digit declines as noted in the report.

(more…)

3 Comments
Leave a Comment

Tagged with: • • •  

The Big Question for Ben Bernanke

On July 21, 2010, in Economy, by Tim

Federal Reserve Chairman Ben Bernanke presents his semi-annual report on monetary policy to the Senate Banking Committee in just a couple of hours. Here are a few suggested questions from David Wessel of the Wall Street Journal.

The big question is, “Why isn’t the Fed doing more to help an economy in which inflation is lower than the Fed wants it to be and unemployment is much higher?”

3 Comments
Leave a Comment

Tagged with: • • •  

One Step Closer to De-flation

On July 16, 2010, in Economy, by Tim

The Labor Department reported that consumer prices fell 0.1 percent in June, down for the third straight month, paced by further declines in energy prices.

On a year-over-year basis, the government’s measure of annual inflation fell from 2.0 percent in May to just 1.1 percent in June, the lowest level since last October when the price index first pushed back into positive territory after almost a year of negative numbers.

(more…)

0 Comments
Leave a Comment

Tagged with: •  

More (Yellow) Ink for Bob Prechter

On July 10, 2010, in Economy, Stocks, by Tim

After getting a renewal notice for my Wall Street Journal subscription that was about four times as much as what I’d paid in recent years, it wasn’t too hard a decision to let it lapse (honestly, what did they expect?). By the looks of the comments for Jason Zweig’s article this weekend that features fear-mongerer Bob Prechter, you’d think that I’m not the only reader who is no longer a paying subscriber and that the ink is running a little yellow at the WSJ.

Get Ready for a Cataclysmic Market Crash! (Or Maybe Not)

_
Could the Dow really drop 90%?

Earlier this month, in an interview that was widely circulated online, market analyst Robert Prechter predicted that the Dow Jones Industrial Average will fall below 1000 within the next six years. The Dow promptly surged back above 10000, but it is worth asking whether Mr. Prechter might be right anyway.
…
Mr. Prechter is a technical analyst who studies the past price performance of the markets for clues to the future. He also believes that investors move in and out of the market on predictable waves of optimism and pessimism. “Because the mania [the bull markets of 1982 to 1999 and 2003 to 2007] was so terrific,” he told me this week, “it will be followed by a negative trend in social mood that will lead to a complete retracement.” That would put the Dow back to its levels in 1982, below 1000.

“In a deflationary environment, the last thing you want is to own any financial asset,” Mr. Prechter added.

Yeah, and gold will never go over $400 as Prechter famously wrote early in the last decade.

Damien Hoffman over at Wall Street Cheat Sheet had the far superior Prechter column this week when he asked, Is Elliott Wave Theory High Priest Robert Prechter Certifiably Insane?

3 Comments
Leave a Comment

Tagged with: • •  
Page 1 of 3123

IMAGE

© 2010 The Mess That Greenspan Made