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alstry (35.02)

No One IMMUNE from the DEflationary Tsunami

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January 22, 2009 – Comments (8)

MICROSOFT
'We are not immune'
Software giant orders cuts of up to 5,000 jobs, including 1,400 at once, as CEO Steve Ballmer concedes weakness in the face of macroeconomic turmoil.

Prepare or beware.......

Deleverage.......sock away 24-36 months of living expenses in liquid savings.....and party hard when you can............

Deflation nation is spreading to contagion.....but this is the clensing process we need to get through this mess......it is not a credit crisis......it is a borrower crisis........and we need to get debt into balance with revenues......and revenues are crashing.

Unless the world reduces debt.....the whole system is at threat......so don't sweat........the problem will be met.......make your bet.........no need to fret............get your chips set.......

8 Comments – Post Your Own

#1) On January 22, 2009 at 10:20 AM, unvrsldeflation (85.25) wrote:

When is someone in power going to talk about getting money into the hands of the public rather than just institutions?

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#2) On January 22, 2009 at 10:39 AM, snakeyd (< 20) wrote:

The electrical company I work for has tons of inventory (conduit, wire)pegged to copper/steel...........

Almost a million dollars has been written off this year alone due to market prices plunging. 

About as deflationary as you can get.

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#3) On January 22, 2009 at 11:12 AM, SnoopyDancing (< 20) wrote:

Snakeyd, your second item brings up an interesting detail as it relates to the accouting rules. If your company really did write off value of assets in their financials only because of market prices plunging, those otherwise unrealized losses are not "written up" again until assets are sold...not when the markets turn up again. It's a 1-way street. 

I wonder how much of the current financial mess -- and its ongoing emotional impact to investors' trading styles -- has been and continues to be exacerbated by losses in companies' financials due to writedowns on asset values they now take that 10 years ago were not required. Then, you simply had more unrealized losses on investments and higher book values on assets. Stuff analysts had to spend more time wading through because it was nicely hidden. Hmmm. Just part of the perfect storm.

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#4) On January 22, 2009 at 11:29 AM, jgseattle (34.10) wrote:

Alstry - The statistic with the best corelation to housing prices is employment.  I wonder how housing prices can stablize until employment is stable?  So here is the first part of a downward spiral.  The thing is that we have seen this before and it did not grow into massive deflation. 

What I am looking for as an indicator of coming massive deflation and hardship is wage deflation.  When we start to see that then the economy is in big trouble.

I can point to a few areas of wage deflation - airlines and autos.  Both unionized with benefits & pay that were not sustainable.  Have you see wage deflation anywhere?

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#5) On January 22, 2009 at 5:13 PM, kstarich (30.62) wrote:

Wage deflation has already occurred in the form of reduced hours extended holiday shutdowns etc.

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#6) On January 22, 2009 at 5:35 PM, kryotex (< 20) wrote:

SnoopyDancing; you ask about how the emotional impact affects investors. I'd say a lot. Even traders with strong "buy and hold" for the long-term are edgy; its just the psychology of the trading industry. For myself, I took the sleep-at-night approach; I sold 100% of the mutual funds and stocks that I had, into cash. I paid off my home, and the rest is deposited in a government-insured GIC at 4.5% interest. I'm pleased with those types of returns right now. I dumped my holdings just after the DOW dropped more than 20%. I'm happy I took the "RISK" then.

I think its a huge risk to sell my mutual funds, especially before their maturity dates. I just called my broker and said sell, sell, sell. And I'm glad I did, even after paying the early withdrawal fees. I even sold my kids RESPs which were all in mutual funds, and transferred to 4.5% GICs.

One thing I don't understand, and maybe some fool can help me, but Canada's banks offer GICs, which are all government insured. If you use a Credit Union, as of this year the entire deposit is insured/backed by the CDIC. US returns appear much lower. Mind you, I wish I had bought your US dollar a few months ago, when the currencies were at par. The US dollar as since strengthened by some 25% or the CDN dollar has dropped...

Is now a time to get Motley Fool Pro? or should people wait?

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#7) On January 22, 2009 at 5:49 PM, kryotex (< 20) wrote:

Igseattle,

We're hearing of employees having to work longer hours at the same pay, or accepting a 25% discounts across the board to keep everyone employed at a company, or reducing benefits (sick days). Our unions are going to begin demanding higher pays (http://www.bcfed.ca/aggregator/categories/1?page=1) or risking strikes even at the risk of no wages during this crisis. The Port Authority would essentially shutdown import/export; maybe its a bigger strategy for Canada to Nationalize itself.

We're so happy the 2010 Olympics are coming to Vancouver/Whistler. Housing prices were soaring; and new villages & resorts for housing the olympics. The largest Village, being built in Vancouver's finest area, went to the government (like Detroit3) and said they'd be bankrupt, unless they received some 400million in taxpayer funding. By accepting the 2010, we're obligated to complete our infrastructure building, new highways, by November 2009. The 2010 is just running our province into its biggest defecit ever. Not even the olympics are helping save housing prices.

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#8) On January 23, 2009 at 1:10 PM, mliu01 (< 20) wrote:

Alstry, looks like gold bugs does not care what you are saying. lol

 We are going to rally with or without you. I haver personally converted few hardcore deflationists to buy few coins. I have thousands of reasons why you should buy it too. Of course, only if you have an open mind.

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