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alstry (36.04)

Don't Shoot the Messenger

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December 23, 2008 – Comments (18)

SACRAMENTO, Calif. – California's chief financial officer warned Monday that the state would run out of money in about two months

HONG KONG (AFP) – Macau's giant Venetian casino owned by troubled Las Vegas Sands has sacked 500 staff(note the location)....Last month, the US-based firm said it was firing up to 11,000 mainly construction staff as it halted work at a new 6,400-room resort close to the Venetian

The recession and housing bust have slowed migration throughout the U.S., keeping more Americans in place, according to Census Bureau data released Monday.

During this holiday season of hard times, not even houses of God have been spared. Church giving is down, and lenders believe more churches than ever have fallen behind on loans, with some filing for bankruptcy.

Japan’s exports plunged the most on record in November as global demand for cars and electronics collapsed

“You never see that,” Lytle said. “It’s quiet. Too quiet.”  Port traffic has slowed from North America to Europe and Asia as a recession erodes consumer demand and the credit crisis chokes off loans to export-dependent companies.

The worst U.S. auto market since the early 1990s may force Toyota Motor Corp. to do something that was once unthinkable: cut its North American payroll.

U.S. retailers will face a Darwinian fight for survival next year as they run out of cash as early as January and competition forces thousands of store closings, according to private-equity buyers and restructuring experts.

U.K. third-quarter GDP revised down; fourth quarter looks grim

New Zealand economy shrinks further

Unisys to lay off 1,300 in cost-cutting move

Plunging home prices, rising unemployment and tightening credit have led consumers to rein in spending, resulting in what may be the worst holiday season in at least four decades.

Manpower Inc. lowered its financial forecast for the fourth quarter, in the latest sign that the job market is weakening rapidly, and that the troubles are spreading to Europe.

Old Dominion Freight Line sees drop in quarterly tonnage

Textron lowers outlook, to cut about 5% of workforce

We could go on and on and on and on and on........................

Wages being slashed, job market weakening RAPIDLY, plunging home prices, wealth evaporating, municipalities running out of money, prices for goods and services declining all over the place.....

And some CAPs members want you to believe this is inflationary??????????  My friends, I can't change the facts.....it is what it is.......

Fools, don't be fooled by the fools who are saying the fed is printing money so it must be inflation...obviously these  fools never took a course in Alstrynomics(the practical and common sense application of Economics....as opposed to theory in a vacum).  Even if there is printing, if wealth is being destroyed at a faster rate than the printing, WE SEE IT EVERYWHERE, there is a net reduction in spending capaciity and often prices decline.  Yes, Virginia, you can have monetary inflation and price deflation.  Most people in the common sense world define inflation as rising prices, not increasing money supply.

Japan practically doubled its money supply during its recession for for about 10 years during the 90s as prices kept falling and falling.  Is that inflation or deflation?????

I can't change the facts....business after business is shutting down, letting workers go, or cutting pay, pension fund assets are evaporating, millions of mortgages are on the brink of default, municipalities are coping with rising costs and shrinking revenues, our investments are contracting in value, oil prices are crashing, and on and on............and this is just no not just America...its spreading everywhere like a rapidly metasticizing cancer.

Just like you can't drink your way out of alcoholism, you can't print your way out of insolvency.  If most don't have any money, even if few do, life sucks for all.  America was great because everyone had some chips at the poker table.  It was one hell of a party.  Yes some had more than others, but for the most part, everyone was allowed to play.  Now that fewer and fewer have any chips at all......it is just not the same game my friends.

But don't despair.....PREPARE.  The chips will start flowing again....just probably not for a while.  In the mean time.....save your chips, the value is increasing everyday, hang out with friends and family, and if you are sitting on an Ace with three on the table flanked by a couple of off suited cards....go all in.

Life is one big poker game and you must know when to hold em........and now is the time to save cash.

18 Comments – Post Your Own

#1) On December 23, 2008 at 8:24 AM, Nainara (< 20) wrote:

Alstry, am I mistaken in interpreting your thesis as that the velocity of money will continue to decline in perpetuity?

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#2) On December 23, 2008 at 8:30 AM, djemonk (< 20) wrote:

Alstry, am I mistaken in interpreting your thesis as that the velocity of money will continue to decline in perpetuity?

There's no 'in perpetuity' in economics.  That kind of thinking got us into this mess.  I never read alstry mention that it's going to continue this way forever.  In fact, in this article he pretty much states that he believes it's going to deflate for a while but it will eventually stop.

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#3) On December 23, 2008 at 8:59 AM, pedorrero (< 20) wrote:

I tend to agree with Alstry on some points.   Government, due to inherent corruption and [self-]deception, largely got us into the mess.   To the extent the problems are laid bare, unwind, and are allowed to correct, tha is good, even though large numbers of businesses and individuals may go bust.   A lot of this was "fraud" from the beginning... Perhaps the best solution is to let things fix themselves.   Government fix this for us ... good luck!

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#4) On December 23, 2008 at 9:13 AM, alstry (36.04) wrote:

Nainara,

Yes you are mistaken.  Just like those who see price declines as inflation.

 

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#5) On December 23, 2008 at 9:38 AM, dinodelaurentis (71.70) wrote:

killing the messenger is a time honored tradition.

like being a Fool.

alstry, if you insist on telling me how to behave i will repond in kind!

Have A Merry Christmas!

That's An Order!!! :)

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#6) On December 23, 2008 at 9:44 AM, alstry (36.04) wrote:

poderrero,

Even more individuals and businesses will go bust if it is not allowed to unwind.  Hyperinflation will  kick in and few will be able to afford anything.

Society would break down and material possessions would be worthless....including gold.  We used to live in an agrarian society where even if the economy slowed....most had access to food.  Today, few have access to food outside the traditional food distribution chains.

A sociatal breakdown  as contemplated above would result in anarchy and mass starvation, even gold  doesn't provide much protection against the force of an oncoming fist.

I highly doubt anything of the sort is in the offing.  What is coming will likely be extremely painful for many...but it a stretch to take pain and turn it into certain death.

It is time for America to toughen up, this will be good for our children as they will become stronger emotionally against their foreign competitors.  You think a small chinese or indian child cries if he can't get a WII....he learns to wait, works hard,  and when he can afford it, buys it.

Our children will learn to work and save for what they get...instead of thinking they are entitled to anything the see on TV.

We will appreciate the fruits of our labor instead of the fruits of a visa or american express.

In the long run this will be good for our country...but during the interim, many will learn the joy of simplicity.

 

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#7) On December 23, 2008 at 10:02 AM, rlloydevans (22.87) wrote:

The problem here is too many people are confusing short term and long term effect. 

Short term there is massive deflationary pressure.  The infusion of massive amounts of money into the system is designed to offset that.  However, this economic cycle will change direction at some point, although I have to point out we still have the probably wave of the Alt-A Option Payment mortgages that should start hitting your neighborhood foreclosure market soon.  This will likely cause another wave of financial chaos, requiring more billions/trillions of payouts.

But yes, at some point the cycle will stop and deflationary influences will fade.  At that point (in 9-24 months) we will be sitting on a massive money supply backed up by a crushing national debt from all of these trillions of government spending - a recipe for a tsunami of inflationary forces.  LONG TERM - we are looking at extremely high inflation.  In fact, the pieces I see getting pushed into play are much more impressive than the causes of the hyperinflationary period of the 1980's.  Then, I got my first mortgage at 12%, and I was thrilled to get such a low rate.

So short term?  Yes it is a time of deflation.  But we are laying the stage for a long term period of hyperinflation.  This is not theory in a vacuum, this is learning from the lessons from history - or at least of 30 years ago. 

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#8) On December 23, 2008 at 10:09 AM, alstry (36.04) wrote:

rlloyd,

What lessons did you learn from Japan when a massive amount of printing took place and prices went down and  down  for  a long long  time?

It could be argued that the price declines in America will be much more  extreme as debt destruction grows and lending slows.

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#9) On December 23, 2008 at 10:33 AM, alstry (36.04) wrote:

HOME PRICES CRASHING at record rate AND INVENTORY GROWING

Does this sound like inflation to you?????

In the past year the median sales price fell 13.2% -- the largest decline since data collection began in 1968 and likely since the Great Depression -- to $181,300. The inventory of unsold homes on the market rose 0.1% to 4.2 million, an 11.2-month supply at the current sales pace. The 11.2-month supply matches a recent peak set in April, and is the highest since the mid 1980s. Report this comment
#10) On December 23, 2008 at 10:40 AM, joshnix2 (< 20) wrote:

I would like to see these comments state whether "inflation" is of the dollar or prices. Also please correct me if I am wrong, but inflation of the dollar would cause our foreign good prices to go down but domestic prices to go up. The deflation of the dollar, along with the crashing of our economy and building of the national debt is going to cause all prices to rise. Am I on target here or off?

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#11) On December 23, 2008 at 10:49 AM, alstry (36.04) wrote:

Aside from mixing up the effects of inflation/deflation....you pretty much got it.

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#12) On December 23, 2008 at 10:52 AM, djemonk (< 20) wrote:

I'm starting to see where alstry is coming from here.  He's seeing the massive evaporation of debt, which reflexively means a massive evaporation of the money supply.  That's the definition of deflation.

The Fed is printing money left and right but I think the belief is that they are creating less debt than we're watching evaporate.  Hence hyperinflation is not likely and the goldbugs are going to be left holding small chunks of rock that, while very pretty, are relatively inedible and require transaction fees to be paid again before they can be spent.

I guess it comes down to whether you think Bernake will over or under shoot the target.

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#13) On December 23, 2008 at 10:54 AM, kaskoosek (95.29) wrote:

Alstry

You are only looking at the variables causing the current deflation.

There are other variables that could trigger the collapse of the dollar therby causing an enivitable hyperinflation in the US.

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#14) On December 23, 2008 at 10:56 AM, Nainara (< 20) wrote:

Yes you are mistaken.  Just like those who see price declines as inflation.

You have not presented much clarification here with regard to your views reagarding the extent and duration of the deflationary pressures on the economy. You have, however, successfully beaten your inflation straw man to a pulp.

While I haven't read every article posted, I don't believe I've seen anyone on this board assert that inflationary pressures are dominant in the present environment.

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#15) On December 23, 2008 at 10:58 AM, alstry (36.04) wrote:

Kas,

There are a lot of variables that could trigger a lot of things......who knows, the Swedish Bikini Team may come knocking on my front door Christmas morning......

What I focus on are the most likely conclusions based on the  currently available  facts.

Although some like to fantasize about life, I try to make life a fantasy.

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#16) On December 23, 2008 at 12:04 PM, guiron (21.49) wrote:

Even if there is printing, if wealth is being destroyed at a faster rate than the printing, WE SEE IT EVERYWHERE, there is a net reduction in spending capaciity and often prices decline.

Bingo. Thank you. 

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#17) On December 23, 2008 at 1:00 PM, motleyanimal (87.48) wrote:

The Swedish Bikini Team is coming to my house on Christmas for my annual full body massage.

But fear not Alstry, I am advised that you will be visited by the Japanese Sumo Wrestling Team who will provide you with similar services.

http://www.youtube.com/watch?v=vJ1wnbNIUrc

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#18) On December 23, 2008 at 4:37 PM, jesusfreakinco (28.95) wrote:

Alstry says...

What lessons did you learn from Japan when a massive amount of printing took place and prices went down and  down  for  a long long  time?

Dude - today's circumstance is NOTHING like Japan over the past 20 years.  Haven't you seen that the whole world is in recession or worse and confidence in the USD is fading.

I guess you are counting on China and Japan propping up the dollar forever.  If that happens, then perhaps inflation won't take hold in the long run, but for how long can that happen?

A big portion of inflation/deflation argument comes from the strength/weakness of the USD - haven't you heard that we impact MOST of everything we consume...

Thoughts?

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