As I am writing our stockmarketsignal.com web pages, I often think of related topics that would be interesting to discuss back and forth with our readers. Questions like What is the big picture in the stock markets? What are the likely risks and potential rewards that will become apparent to investors over the next several years? Now I don’t present myself as knowing the answers to these questions but I enjoy thinking about them , reading the opinions of others and discussing them with other interested people like yourselves.
As a beginning, let me suggest a couple of things that may have a big effect on all of us in the near future.
The huge credit bubble which has been expanding for the last couple of decades seems to be bursting with the sub prime mortgage debacle, and this should lead to at least a recession and perhaps even a depression.
Safety of capital will become of prime concern and will replace the greedy overvaluation of almost every new paper asset marketed over the past decade. Those who are able to protect their buying power will have ample opportunity to shop for bargains when prices once again are in-line with intrinsic value.
When I put forward ideas to talk about, I will try to provide you with links to respected sources which support our discussion. Here are the first two:
John Mauldin’s weekly e-letter provides a wealth of interesting analysis on current economic and investment developments such as “Should the Fed cut interest rates?”
http://www.frontlinethoughts.com
Bob Prechter’s comments on , “What is Deflation and What causes it to Occur?” are must reading. http://www.elliotwave.com/deflation/
The elliotwave deflation article is interesting.
You have to wonder if deflation is ever possible, given that the fed will just print money to ensure the lending and buying will just continue.
Perhaps it will take international intervention to move away from the us dollar before the money printing will ever stop.
…and what happens if the fed can’t print more money? Will the collapse result in our FDIC deposits just vaporizing along with the rest of the ephemeral financial assets?
The fed may just ‘keep printing money’ in an effort to stave off deflation…but this would lead to hyper-inflation like seen in Germany in the 1920’s…. which would could only go on so long before it came crashing down…
The rest of the world has already begun to move away from the US dollar (hence its current weakness) but this should snowball as the US credit bubble continues to deflate… and if foreigners, especially foreign governments like China, stop purchasing US debt instruments, where will the Fed find money to pay off FDIC claims? BY printing more money, devaluing the us buck even further and stoking the hyper-inflation cycle or by defaulting on its debt…. ugly either way.
well well…. banks getting nationalized market tumbling… and the fed printing ,money in the TRILLIONS to try and keep it all afloat…. can you say ‘ Weimar republic’ (hyperinflation)? Yep looks like the US (and other governments) are trying to inflate their way outta this mess. How long before wicked inflation grabs hold?
Interesting to note that while the US is busy running the money printing presses as fast as they can… the value of the Canadian $ actually dropped sharply vs the greenback last week. This looks like a great opportunity to divest of US dollars and go long the Loonie as Canada’s much greater financial balances (current account and fiscal) and the US’s monetary inflation should lead to a much weaker US dollar vs the Can dollar.
my .02
Phil