interesting....

 

fyi one of the things I read that was discussed at the g20 event was the need for the US to stop saving and spend more. I was originally confused but now I see haha. Let me see if I can find the article.

 

There will be segmented deflation DF, it is inevitible, the housing sector is a massive portion of the economy and with the loans on the books for inflated prices not worth current value, there is absolutely nothing to be done.

The Keynesian Hangover is at hand...there will be a contraction the question is should we ride it out, or interfere with the market ridding itself of malinvestments?

Otherwise, monetary supply will grow, supposedly easing the deflation (but not in fact, there has been no job creation) however sooner or later inflation will reign.

The Euros know this, that is why they are taking mild austerity measures..which they did in the 30's, which is also why there was no "Great Depression' in Europe in the 30's...they had a recession.

 

Ya lost me here.......... I think you are a pretty aware guy from a macro financial and economic perspective....so I am not sure what you are saying ....FAS 157 "allowed" these large corporations to write the toxic assets off their P&L AND balance sheet, so the value of most of these large publically traded companies that are invested heavily into mortgage backed or derivatives have in point of fact already written down or "deflated" the value of mortgage backed securities so that has already happened. The fact FAS 157 has not gotten more huge attention is beyond me..........it is like okey dokey lets pretend this bad money you owe...well just does not exist....................

The pisser of it is that they have already invested in the same speculative investments ...AGAIN, that contributed a great deal to the whole mess anyway. Glass Stegal, paybackulus, bad business incentives policy and a whole bunch of other things contributed to this mess of an economy.....so nothing has been "corrected"............those issues are mostly still in play.

but any real deflation long term will be a currency meltdown or worse IMHO because the money supply however you want to speculate is high and any triangle balance of spending/M3 money is widening, (so you just cannot remove money from the supply chain) ..... which is the only thing IMHO causing "deflation...................throw in that our debt is through the roof......even without counting on underfunded SS, medicare, and Federal retirement programs......our budget projections outward were amateurish, tax policy in less than inviting to business, ...........

Short term we might get some deflation due to some production based economies trying to avoid there own version of Obamanomic unemployment and margin/GDP compression............. but long term folks...like over the next 40 years..............at least IMHO .......we are going to get massive and LONG TERM inflation due to one thing...our government spending as a percent of productivity...................IMHO

 

Right church, wrong pew Mi2, I was speaking about individual homeowners, who now have an asset that is not worth as much as the debt they have to pay to retain it.

Quite simply, those prices will deflate and on a grand scale, then hit their floor, then bounce a bit, those mortgage holders are/were the Consumers that were driving the economy for most of the 00's, now they are just struggling to pay their mortgages...or comitting strategic defaults on a large scale.

Put it this way, in FL 20% of all home sales are bankruptcy proceedings, that is a massive amount devalued homes that have and will be dumped onto the market further deflating home prices.

Housing is such a massive portion of the US Economy and it will be years before it functions normally again

 

Ahhhhhhhhh I gotchya.....I though you were referring to the institutions.........I agree btw....housing may NEVER be the same as far as an investment haven or as far as the dynamics for the individuals.....