Excessive debt can have both effects (the inflation/deflation debate has failed to take note that both can co-exist).

On the consumer side: incomes are still deflating especially in real terms. That’s why productivity is soaring (and not because we’re “producing” more). The economy has yet to add net jobs, the work week dropped again in the latest report. The pool of un/underemployed is now sufficiently large that this ensures that wages and incomes [...]

The proverbial “this time it’s different” is dead give away that it’s not different.

We learn history as not to repeat it. History has shown that mankind has made same mistakes over and over again. And many people called the end of Great Depression in 1932 and and through out the depression.
I fear Great Depression II as I think we’re in 2nr or 3rd inning as what really changed [...]

CRE built in a bubble so the amount of the loans are at peak prices, tenants going out of business or can’t afford rent.

Owners of CRE default on loans. Bad loans build up and sink banks.
1. If this is the case wouldn’t faster price adjustments exacerbate the problem? Kind of like the diiference between draining a dam using the flood gates as oppsed to blowing it up.
2. Office supply pipeline doesn’t seem to mean anything in New York. [...]

Morally and intellectually California is a Failed State.

It has failed because instant gratification and entitlements have fatally converged with vanity and collectivism.
As a result, California has an entrenched, very rich but tiny elite , a rapidly expanding Parasitic Economy that exists only to consume the substance of a swiftly shrinking Productive Economy and an imploding but fragmented middle class that no longer [...]

An Extended Market With Few Entry Points

The dip-buyers pounced on a little gap down this morning and were buying relentlessly until about 2 p.m. EST, when a little profit-taking finally hit. That pushed the Nasdaq back into the red momentarily, but once again the dip-buyers showed up, and we managed a close in the middle in the intraday range.
Market players are [...]

To all the supporters of Ron Paul:

Fellas, sitting here and bitching about the Fed’s routine steamy sleepovers with the banksters and the corrupt congressmen isn’t gonna change anything. I believe that Ron Paul can carry himself just fine as long as he gets the attention of the masses…the stupid, slow, obsessed with sports (men) and celebrities (women), ignorant, wining, cowardly masses. [...]

It Will Be Far Worse Than The Great Depression. (So true!)

If the economy was a person, then the producing sector (agriculture, manufacturing, mining, etc) would be its “income”. If the service sector is much smaller than the producing sector (like China today or the US one hundred years ago), then a country is living below its means (net saver). If the service sector is much [...]

Must-Know News - March 09 - Overwhelmingly the news indicates that there is NO recovery

1) US could face debt crisis over Fed decision to halt agency MBS purchases

Benn Steil, director of international economics at the Council on Foreign Relations, said his analysis suggests entities that purchased US government debt in 2009 might cease to do so once the US central bank halts purchases of Freddie [...]

State Tax Revenues Plummet By $87 Billion, Biggest Year Over Year Decline In History

The Center on Budget and Policy Priorities has released a report “State Tax Changes in Response to the Recession” in which the center notes that “national recession has had such a devastating effect on state finances that states took in $87 billion less in tax revenue from October 2008 through September 2009 than they collected [...]

From being bullish to bearish

I change from being bullish to bearish as often as I have breakfast or read the news in this cyclically up and down market. I have just switched from being bullish to bearish and sold all my holdings. I feel much more comfortable buying under the 10,000 mark and I think it’s just to early [...]

One year after an impressive bull market rally where I”m sure everyone has made money.

Yet, one year after the fact, nothing has been done about those who drove the economy off the cliff. No one has been prosecuted, no one removed from power, not a thing done to help the real victims here: the average American. The banks are super sized now and even more powerful, gambling with everyone’s [...]

CHINA CONFIRMS NO INTEREST IN GOLD AT CURRENT PRICES

“China Cautious on Gold Buying”
By Aaron Back - Wall Street Journal
“BEIJING — China’s chief foreign-exchange regulator suggested the country’s appetite for further gold purchases may be limited and offered soothing words about China’s role as an investor in U.S. Treasurys.
“Gold is not a bad asset, but currently a few factors limit our ability to increase [...]

The so-called “Great Recession” has left Americans depending on the government dole like never before.

Without record levels of welfare, unemployment and other government benefits as well as tax cuts last year, the income of U.S. households would have plunged by an astonishing $723 billion — more than four times the record $167 billion drop reported last month by the Commerce Department.
Moreover, for the first time since the Great Depression, [...]

Many Americans have been living in a fantasy world of easy credit, and that world is over.

The country as a whole, will face a drop in living standards. Not only was the country living beyond its means, but so were many American families. The bubble hid the fact that the economic state of the nation was not as good as reported. The focus on GDP has been misleading. Many groups and [...]

Better get your seatbelts on -

“March 8 (Bloomberg) — Equity mutual funds are burning through cash at the fastest rate in 18 years, leaving them with the smallest reserves since 2007 in a sign that gains for the Standard & Poor’s 500 Index may slow.
Cash dropped to 3.6 percent of assets from 5.7 percent in January 2009, leaving managers with [...]

The dot com bust vs. the current credit bust

The dot com bust could be seen because of the sky high PE multiples. The market was fundamentally working….people just jumped into a sector bubble. This was really more of an investing choice.
Today’s financial collapse was more opaque. Many sectors outside finance and home building were crushed largely because of what happened in these sectors. [...]

Credit Union Pays Savers to Close Their Accounts; Deposit Insurance Makes Saving Accounts a Losing Proposition for Banks

Nevada Federal Credit Union has too much money and does not know what to do with it. Worse yet, sitting in cash is costing the credit union money.
Insurance premiums are the culprit. On top of any deposit premium paid to customers, insurance runs .4%. Yet short term treasuries yield .25%.
Nevada Federal sees no good lending [...]

Must-Know News - March 08 “Economy is deteriorating faster than you think”

1) Kansas City wants to close half its public schools

“KANSAS CITY, Mo. — Kansas City was held up as a national example of bold thinking when it tried to integrate its schools by making them better than the suburban districts where many kids were moving. The result was one school with an [...]

Program Will Pay Homeowners to Sell at a Loss

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.
This latest program, which will allow owners to sell for less than they owe and will give them a little cash to [...]

Chris Hedges’ “Empire of Illusion” is a heavy, depressing read — but well worth it.

Here’s another quote from Chapter V, “The Illusion of America”, pertaining nicely to the utterly grotesque 12-month Casino Dow “rally” which is totally divorced from reality:
“The daily bleeding of thousands of jobs will soon turn our economic crisis into a political crisis. The street protests, strikes, and riots that have rattled France, Turkey, Greece, Ukraine, [...]

Breaking News:

In Pharmacology, all drugs have two names, a trade name and generic name. For example, the trade name of Tylenol also has a generic name of Acetaminophen. Aleve is also called Naproxen. Amoxil is also call Amoxicillin and Advil is also called Ibuprofen.
The FDA has been looking for a generic name for Viagra. After careful [...]

The fraud is simply reaching EPIC levels—-

“Consider the immediate dire consequences of what would happen in America if the US government increased the capital requirements of the top 10 US banks tomorrow. Since all of these banking stocks have been manipulated higher over the last 9 months and are severely overvalued, raising new capital through secondary offerings would largely be an [...]

A new crisis is emerging: Students are probably going to die first before they can repay their loans.

At least nine out of 10 students who earn degrees or certificates at for-profit schools borrow money to attend, a higher ratio than four years earlier and more than at universities or community colleges.
Nationally, for-profit schools had the highest share of defaults in the United States in 2007: 11 percent. Community colleges had a nearly [...]

I think that we are going to see another very serious liquidity crisis.

There is too much debt out there without enough collateral backing it. Everybody is frantically trying to find yield. They have been finding it in the bubbles being created in stock markets, commodities and interest rate differentials driving the carry trade. But if interest rates go up unexpectedly then trillions in carry trade positions could [...]

Who am I to say if this is a bull market, bull run in a bear market, etc. I have no idea.

What I do know is that the paradigm has shifted a lot in the past few generations, so I don’t give much credibility to the “long-term” chartists, graphics, predictions and what not.
When I started trading about 20 some years ago, the Internet was in its infancy. I had to call my broker to enter an [...]

Allowing zombie banks to continue to operate and take bigger risks has only increased the costs of cleaning up the mess.

No one is denying the financial sector didn’t need to be stabilized. The collapse of Lehman Brothers in effect “saved” the real banking sector. The government should have played by the normal rules of capitalism and forced financial restructuring and let shareholders be fist in line to absorb losses, NOT the taxpayer. With the government [...]

As long as there is a belief that we are stabilizing and ‘turning the corner’ the market will march higher.

While I don’t believe it will make any significant difference in our economy due to our continued use of deficit spending to create the illusion of growth, it doesn’t matter. It is what investors believe will happen, not what will actually happen that may keep the market up in this range.
We may even have a [...]

Banks are content to hoard trillions of dollars and hence we have deflation.

I still see prices going up at the grocery stores, but large ticket goods are definitely falling. When these banks decide to unleash these dollars through their subsidiaries to purchase assets for pennies on the dollars and the largess hits the street, they’ll say we have inflation.
That is the way I see it. What [...]

A sign of deflation: 15,000 San Francisco Workers Given Layoff Notices (And Re-Hired At Lower Wages)

Emotions ranged from disbelief to despair to downright anger Friday as 15,000 San Francisco city workers received pink slips. But Mayor Gavin Newsom reiterated that his controversial plan to rehire them under shortened workweeks would wind up saving thousands of jobs.
Newsom ordered the layoff notices be sent to most of the city’s 26,000 workers and [...]

All time historic highs for % of population on food stamps.

The Food Stamps (SNAP) data for December is out - let’s take a look at history, shall we:
Month ….. # People ….. Cost Per Mnth
Dec-06 ….. 26,390,332 ….. $2,546,342,023
Dec-07 ….. 27,561,755 ….. $2,789,090,515
Dec-08 ….. 31,784,445 ….. $3,648,864,017
Dec-09 ….. 38,978,382 ….. $5,244,527,739
Change from ‘06 - up 12,588,050 people, $2,698,185,716
% Change from ‘06 - up 47.7% people, 106.0% dollars.
How can dollars double while people only goes up 50%? Simple, the dollars per person [...]