Reply to: Question for Economics Experts - riding out the current storm

[bobsmithldn]

Stock Markets in Asia region decouple from slavish point for point following of Dow, due to increased internal & regional demand of maturing economies. Applies less to Chinese markets as they boomed so spectacularly. More Nikkei, HS, Straits.
Also remember that stock market does not equal economic output.

Who's gonna buy these shares? Jo Schmo - no, he's busy hiding his wad under the mattress? Hedge funds - no, a lot of them will be going to the wall or else they're busy creating another bubble whilst buying commodities.

We ain't seen nothing yet.

[BrilloPad]

Listen and learn from Jim Rogers (a $bn, who used to own the Quantum Fund with Soros). Lots of videos on youtube. Been around for donkeys years and knows a thing or two. He called Bernanke "an idiot".

Not every billionaire knows everything. Look at Joseph Lewis. Bear Stearns shares anyone?

[ace00]

"Decouple" is a nonsense. How can the Chinese economy continue to grow at such a rate i(if you believe govt GDP figures in the first place) f the West (US/EU) stop buying their goods? They'll have to reduce their output as high input prices won't allow them to continue to produce at break-neck speed; if they do their output prices will fall, resulting in reduced margins ...

Stock Markets in Asia region decouple from slavish point for point following of Dow, due to increased internal & regional demand of maturing economies. Applies less to Chinese markets as they boomed so spectacularly. More Nikkei, HS, Straits.
Also remember that stock market does not equal economic output.

[AlfredJPruffock]

Johnnys in the basement - mixing up the medicine
Im on the pavement - thinking about the Government
Dont follow leaders and watch the parking meters

Here's an interesting wee snippet about the shape of things to come - a kind of Readers Digest to the debate and some advice as to what to do - as for me - well Im off to play the piano this afternoon at a perfromance at our local Arts centre free weekend festival - all indoors and great acts like the Red Chilli Pipers - tea and cakes available at the interlude (at competitive prices)


All over the world, but especially in the U.S., currencies are being inflated radically; M3 is rising at about 18% per year. Without exception, interest rates eventually reflect inflation. Therefore interest rates are going to rise radically. Governments are currently suppressing rates by lending money cheaply and promiscuously, to keep both borrowers and commercial lenders from going under. But rates are soon going to explode -especially long-term rates. My guess is that we'll see at least the levels of the early '80s, which would mean 15%+ for long-term Treasury bonds. And I'll say that's coming within a couple or three years at the outside.

The government wants low rates, obviously, because low rates make it a lot easier for homeowners to pay their mortgages, among other things. But they forget that low rates also discourage saving - which is the one thing that can actually bring down real rates. Officialdom is between a rock and a hard place, and they're choosing to inflate the currency, hoping to stave off an epidemic of bankruptcy among consumers who borrowed and among the financial institutions that did the lending. The effort will fail and both groups will go bankrupt, simply because the whole society has been living above its means. That will result in large-scale commercial bankruptcies and unemployment.

Higher interest rates will absolutely hammer the economy.

It seems to me a near certainty that we're about to enter something I have long called "The Greater Depression." I suspect it will be inflationary (in the direction of what Germany underwent in the early '20s, or Zimbabwe today), rather than what the U.S. had in the '30s. I should somehow trademark the term "Greater Depression," except that I'm sure Boobus americanus would then blame me for it.

Here I'd like to pinpoint my prime candidate for the Decline and Fall of the Roman Empire, since it almost seems America has been reading pages from their playbook since day one. Many reasons have been evoked for the fall: moral turpitude, immigration, barbarian invasion, Christianity, lead pipes, etc., etc. My candidate is economic stagnation brought on by taxes, regulation and inflation. I'd love to discuss that assertion in detail, but that's not what this article is about.

What should you do?

Reduce your standard of living now (while the situation is still under control), greatly increase your savings (in gold, which is real money) and rig for greatly changed patterns of production, consumption, employment and business for a considerable time. The hurricane that's just starting to hit the economy will both trigger and worsen problems in other areas. Starting with politics, because nearly everyone today believes the ridiculous notion that the government should guide the economy.

Doug Casey is a best-selling author and chairman of Casey Research, LL

[bobsmithldn]

Listen and learn from Jim Rogers (a $bn, who used to own the Quantum Fund with Soros). Lots of videos on youtube. Been around for donkeys years and knows a thing or two. He called Bernanke "an idiot".

[sasguru]

"Decouple" is a nonsense. How can the Chinese economy continue to grow at such a rate i(if you believe govt GDP figures in the first place) f the West (US/EU) stop buying their goods? They'll have to reduce their output as high input prices won't allow them to continue to produce at break-neck speed; if they do their output prices will fall, resulting in reduced margins ...

Exactly. No major economy can "decouple" from any other. China and India are suffering their own inflationary problems already. And demand for Chinese goods is soon set to fall drastically.

[bobsmithldn]

Commodities (inc. Gold): I expect further upside over 10 yr period.
Equities (ISA): Going to nibble on a bit of Chinese - Most of my savings are in Asia, I expect the stock markets there to decouple from USA soon and strengthen.
Bonds: If you have to hold sterling (and I do) you can get 8% (3yrs - with conditions) now but it might go to 10% (1yr) on interest rate hike.
Stuff: I bought a big TV, car, sofa - inflation proof!

End of the World predictions seem a bit suspect to me.

"Decouple" is a nonsense. How can the Chinese economy continue to grow at such a rate i(if you believe govt GDP figures in the first place) f the West (US/EU) stop buying their goods? They'll have to reduce their output as high input prices won't allow them to continue to produce at break-neck speed; if they do their output prices will fall, resulting in reduced margins ...

[Diver]

BTL

I'm leaving the properties to my grand kids so house values don't worry me, I'll just sit here raking in the increased rents til I kick the bucket.

If you have properties then let them out at increased rent and stop whingeing about devaluation. There are loads of people out there that need a roof over their head and can't get a mortgage.

>Diver in smug mode<

[bobsmithldn]

Inflation - rising prices - usually under control

Deflation - falling prices - not a usual state for an economy to be in (except certain sectors, e.g. electronics prices), e.g. Japan last few years.

Stagflation - rising prices, but stagnant/falling growth - this is what we're experiencing now.

We're fooked, I tell you. I for one have stopped flooring the Alfa at every whim - even managed to get 100miles from 1/4 of a tank (if the fuel gauge is correct).

Blame the FED for their loose monetary policy particularly since 2001 and the resultant excesses, the weak $ policy to stimulate the domestic economy. The recent bailing out of Bear Stearns - a publicly owned company - is evidence that it does not have what it takes to manage the economy. BS should have been allowed to fail - that is capitalism!!! Instead taxpayers money is being used to bail out the excesses ... not only that the US government is making things even worse by allowed non-secure assets to be used as collateral ... which is a disaster waiting to happen ...

The US is not willing to raise rates, not is EU or UK, as that will kill any growth that there is ...

FOOKED

[ace00]

Commodities (inc. Gold): I expect further upside over 10 yr period.
Equities (ISA): Going to nibble on a bit of Chinese - Most of my savings are in Asia, I expect the stock markets there to decouple from USA soon and strengthen.
Bonds: If you have to hold sterling (and I do) you can get 8% (3yrs - with conditions) now but it might go to 10% (1yr) on interest rate hike.
Stuff: I bought a big TV, car, sofa - inflation proof!

End of the World predictions seem a bit suspect to me.

[Old Greg]

afternoon Shaun, long time no see, is it day release again ?

Milan.

Day Centre, I think.

[milanbenes]

afternoon Shaun, long time no see, is it day release again ?

Milan.

[shaunbhoy]

well probably I will learn more from you lot than you will learn from me,
Milan.

There is no "probably" about it

hth

SB

[Old Greg]

well the concensus is appearing to be, get into cash

Milan.

Unless you really understand anything better, would be my humble advice.

[Old Greg]

I sold up a long time ago, not quite at peak, but close enough.

<<smug git mode >>

I'll get you next time Penelope Pitstop.