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August 2009 Fire Economy Depression Update – Part I: Snowball In Summer

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Good article, when will we see part empty stores, seems a growing trend in the US. Zimbabwe style economics.

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In the 2001-2002 recession, businesses immediately dropped prices as commodity prices fell like a rock. Businesses are not dropping prices this time because their costs remain too high. The Fed, in its infinite wisdom, has made input costs sticky! Their debt deflation reflation policy has been a complete disaster.

The Bankrupt of England has done the same.

Going to end very badly.

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From the above link:

If you didn’t take our advice from last year and buy up all the cheap durable goods you may need for the next ten years, your window of opportunity is closing fast. You will not see cars and other durable goods this cheap, as measured in the purchasing power of your savings and income, for a very long time. Need some work done on your house? Better hurry.

Tinfoil hats anyone? I am especially puzzled about " work done on your house" - does this author predict builder wage demand inflation? How about mass builder unemployment and wage deflation instead? "Work done on the house" is not an essential, people can live and lived for decades in dilapidated houses. Pump-and-dump job for builder stocks? :P

The US is now well on its way to becoming a 3rd world country.

Right conclusion, wrong reasons. Read today's piece from Mish

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Nice article

Not looking good is it..(understatement of the quarter)

ps i still maintain we will see a global devaluation of all currencies

Edited by Pearshape

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Not completely convinced

But then I'm stupid

Today was a bad day for paper money - it went down against practically everything - stocks, bonds, commodities, gold

If we get a run of days like today, I'll be convinced

The bond market seems to be happy with the Treasury - auction - central bank QE monetisation circle jerk keeping sovereign debt yields down. Can this sort of movement continue with a rising stock market in the absence of inflation of necessities?

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I thought this was a good read as well. The YouTube video of Argentina was good, if a bit wordy (why name all the bankers) and lacking in analysis. The video though got across the fear and anger of the savers being wiped out while the foreign banks socialised the losses and moved on. Which leads me to my point. The article possibly underestimates the soft and hard power of the US and its potential to use this for rent seeking when times get bad; also that no other state really wants to take its place (even the calls for an international currency or extension of special drawing rights have been a bit half hearted). But what is scary is that the article should disabuse anyone of the view that things are under control here, that the UK is too big too fall or follow the Argentina route. The author could easily exchange 'UK' for 'US' to get an even more powerful analysis of his dis-inflation idea. I particularly liked his point about the deflationary hysteria built on one case. Third world economy, empty shelving, and debt default here we come (50/50 chance?). Ka-Poom, Blighty.

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