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alstry (35.03)

Bonds SCREAMING Deflation

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January 15, 2009 – Comments (6)

NEW YORK (MarketWatch) -- Deflation has probably hit the U.S., the December consumer price index is expected to show Friday, and one gauge widely watched by the bond market indicates it may stick around for years to come.

And just think, most of the MF bloggers are screaming INflation.

It seems that there is a whole lot of screaming going on......,..

Stay focused.....Stay on target..........Stay on target.....

Prepare......NEVER fear.

6 Comments – Post Your Own

#1) On January 15, 2009 at 7:48 PM, alstry (35.03) wrote:

MORE PAY CUTS!!!!!!!!!  From Toyota?????

 

SAN FRANCISCO (MarketWatch)-- Toyota Motors Corp. said late Thursday it is adding more "non-production" days to its manufacturing schedule this year, idling several North American plants to cut costs and trim inventory in the face of falling auto sales. The company said the number of days individual plants would be idled varies, with some plants now looking at up to 30 days of downtime between Jan. 1 and April 3.

This is effectively about a 10% paycut.

 

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#2) On January 15, 2009 at 7:54 PM, alstry (35.03) wrote:

By the way, in case anyone wants the REAL solution to the current crisis...here it is.....

SAN FRANCISCO (MarketWatch) -- Colony Capital's Thomas Barrack called for a "good bank, bad bank" solution to the U.S. financial crisis and said a new version of the Resolution Trust Corp. would help "ring-fence" bad assets and get institutions lending again.

Barrack, founder of distressed debt and real estate investment firm Colony Capital and a former Reagan administration official, is one of several experts who have suggested this week that good bank, bad bank structures could ease the credit crunch and soften the recession. See full story.

 Barrack has experience with troubled banks during previous financial crises. He worked with TPG's David Bonderman and Cerberus Capital Management's Stephen Feinberg restructuring Korea First Bank and Japan's Aozora Bank, respectively.

In a letter to investors this week, Barrack said massive government investments and guarantees in recent months have done nothing to restore confidence in the banking system. That's because billions of dollars of troubled assets remain on bank balance sheets. "Strong and experienced bank management teams are trapped in restructuring hell with bad assets and are unable to do what they do best in creating value by initiating new loans," Barrack wrote.

"The culture of good banks does not lend itself to managing and redistributing difficult or restructured assets," he added. "We need to bite the big bullet and centralize the cancer in one definable spot to be managed by professionals."

The government's Troubled Asset Relief Program should be shelved in favor of a "good bank-bad bank pruning program," Barrack said. Under Barrack's proposal, banks worthy of new investment must be identified and private investors should be allowed to invest in them alongside the government. Weaker banks that are shunned by private investors should be allowed to fail.

The toxic assets from these institutions could then be "ring-fenced" by a new Resolution Trust Corp. The remaining valuable assets should then be sold to a good bank that can begin making more loans again, he explained. RTC was a government-owned investment fund that bought bad assets after the savings and loan crisis at the end of the 1980s.

The fund helped get lending going again by buying soured debt from failed institutions and liquidating the assets. A new RTC should be able to buy toxic assets from banks before they fail. It would also be in control of the valuation process, using uniform and consistent pricing criteria, Barrack said.

"If this isn't executed, the financial system will continue its downward spiral," he warned.

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#3) On January 15, 2009 at 8:13 PM, Bupp (28.89) wrote:

I agree that deflation is occuring in the short term,

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#4) On January 15, 2009 at 9:03 PM, nthought (< 20) wrote:

I'm with Alstry.   Deflation will very likely continue through all of 2009, and follow the unemployment rates. 

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#5) On January 15, 2009 at 9:11 PM, RVAspeculator (31.13) wrote:

In 2000 Tech stocks were screaming, "The new paradigm is here!"

In mid-2008 oil was screaming, “Peak oil, we are running out…  Oh no”

This bubble is no different from others and like the others the only thing the bond market bubble is screaming is “sheep like to pile into a well performing asset class”

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#6) On January 15, 2009 at 10:49 PM, foolflea (48.74) wrote:

I'm with RVA. After all, the U.S. government can literally inflate away deflation on a whim (and there isn't a single political incentive not to).

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