DC10

blimey - how low can she go?

Some of you may already be following Chris Martensen's online course at http://www.chrismartenson.com/crashcourse He has just sent out an alert to all subscribers on next steps which narco on GEI has very helpfully downloaded (its $300 annual subscription). Hope he doesn't mind me sharing here. Strongly urge you to take a look at his report. I reckon its the most straightforward advice on what action to take. http://rapidshare.com/files/151073643/The_...w_-_10-3-08.pdf (click on free user at the prompt) In a nutshell - his advice is: 1. SAVE YOUR MONEY! Pare all expenses, save as much as you can, and keep your job. 2. DON’T HOLD DEBT Get out of debt as fast as possible, and don’t take on any new debt. In a deflation, debt is a stone-cold killer. Ask anybody who went through the Great Depression. 3. GET OUT OF STOCKS AND INTO CASH Do not hold stocks. None of them are safe in a deflationary period. Right now, stocks are still valued with price-earnings ratios of 15 or more (on average). At the bottom of a depression/deflation, we might expect that number to go to somewhere between 7 and 10. This means that I would expect as much as another 50% decline in stocks. Or 5,500 on the Dow, or 500 on the S&P. 4. DO NOT HOLD LOWER GRADE BONDS This includes municipal bonds and corporate issues. Only Treasury bonds would be safe here. 5. BE PREPARED FOR SHORTAGES One thing that would happen to an impoverished US would be the loss of imports. What do we import that’s essential or desired? Heck, what don’t we import that’s essential or desired? Take a look around your current life and ask yourself, “What’s pretty cheap right now that I really like to have?”…and if it’s imported, feel free to stock up, as long as it does not materially impact your savings and debt goals from numbers 1 & 2, above. WHAT TO WATCH OUT FOR I am going to fall out of my chair if it turns out that a serious attempt is not made to re-expand this whole mess. The Fed is walking an incredibly fine knife-edge, here. On the one side is a deflationary failure, and on the other side is the inflationary destruction of their only product, the dollar. This is the scariest balancing act for any central banker, and I am very glad to not be in Mr. Bernanke’s shoes. Two things could rather suddenly upset the apple cart here and make me rather dramatically change my advice above. 1. THE DOLLAR DECLINES. If the dollar suddenly begins a rapid descent, especially if accompanied by a spike in interest rates, I will send out an Alert to you that will re-direct the above advice in a significant way. 2. THE FED BEGINS TO DIRECTLY MONETIZE DEBT. We are very close to this, lacking only the official pronouncement that it has started. For some reason, probably related to the fact that they are in as much trouble as the US, the foreign central banks have allowed the current Fed programs of exchanging good money for bad assets to operate without a single peep of protest. Most of these programs are still referred to as “temporary,” meaning that the bad assets are supposed to go back to the originating banks at some point. But when it is openly admitted that they are being “held to maturity,” then this is the death knell for the dollar. Inflation is on the way. (btw He goes on to make a convincing case for still holding the yellow stuff if the Fed go nuclear with their bail out) CP

I see increasing miniumum payments on CC as the equivalent of a margin call or increasing the LTV on a mortgage. If credit is scarce then it seems logical to me that CC companies will try to increase their capital any way they can, in the same way that Banks are doing. Another way is to pull the fixed term 0% interest offers and/or raise interest rates (even if the the BoE lowers). I haven't yet seen any evidence of the above and I don't know to what extent its been happening in the US. It may be logical but is it likely?

I wondered when this next phase would start. Don't credit card companies have the right to demand full repayment of a credit line within 30 days if a minimum payment is missed? If minimum payments are increased so companies can rebuild their capital bases, you can see where this is headed. This is going to affect a LOT of people.

Wow - jon snow is putting it to him straight 'why did you let btl get out of control?'

Hang on a minute. Surely its the landlord's responsibility to pay the tax not mine? I don't use an agent and as far as I am concerned i just pay the money into his account every month and thats that. How can HMRC come chasing after me? My other question remains: If it is his only property and he was living in it before then is he still liable for tax anyway?

No idea if its net of tax. I very much doubt it given the amount we pay. It's the landlord's only property though, are they liable for tax in those cases?

Somewhere else on this forum EDM talked about rents falling being the next stage in the crisis. Maybe we should start tracking rental indices more closely.. My landlord lives overseas, I will be bookmarking this link for when the question of rent rises next comes up.

From yesterday but I couldn't see it posted anywhere here. Apologies if missed. http://business.timesonline.co.uk/tol/busi...icle4828318.ece

http://news.bbc.co.uk/1/hi/business/7637491.stm Is this the first time that falls are reported as house price deflation rather than (negative) inflation? Implies that a long term trend is brewing....

A correction... London is showing.... -2.4% Falling fast. Falling hard.

Is London showing orange? thats -2%? in a month? omg

Bush last night: "If money isn't loosened up, this sucker could go down,"

Personally im quite glad. Gives me time to get my financial ducks in order.

Some inflation still to work through the system, but then years of DEFLATION

and therein lies the nub of this sorry state of affairs. Can you imagine walking into a bank and asking to borrow 1 million to play the stock market. Thats what these people have done. The state was complicit. And we will all pay for it.

Yeah .. this is miles better than the first programme. You can see how people get seduced by it. "British disease" Tamsin went to a property seminar and bought 7 btls from a brochure. Never saw one of the flats. "Absolute disaster"

Blimey ... got to feel a bit sorry for the greater fools... 7 btls. all in neg equity divorced. ouch.

Still someway to beat the record of 2,028 users online on Jun 10 2008, 12:28 PM

http://www.youtube.com/watch?v=eAPSS4J5PJ8

BBC news, the Guardian and the rest of the press are leading with the story but the Murdoch UK broadsheet is not interested, still buried deep in the business section. As you say, perhaps he is fundamentally an optimist.

Yup. Its not even on the front page of the Times online. Who are they trying to kid?

Is the book any good? Presumably the talk is to drum up sales (entrance fee redeemable against purchase) but may be worth a look

Yep, reckon we should have some HPC voices there