The correction will come and at a price. We talk about strategies while what is at stake is survival.

As the World Wide Economic slowdown increases and the heat turns up on the middle and working classes, we all will be facing some ugly possibilities.

Economic solutions don’t always work as with political realities. Enjoyed the posts and agree that world governments would love to create enough inflation to bail the real estate assets out of the hole they are in.

Sorry, don’t think that will happen this time around, you have all heard the saying, “pushing on a string” this what the Fed appears to be doing.

James Monachino

http://www.safehaven.com/article-11769.htm

Monetary Reform: Gold And Bills Of Exchange
by Antal E. Fekete

Address before the Civil Society Institute at Santa Clara University, November 3, 2008

How wonderful that it was presented at my MBA alma mater, Santa Clara Univ.

The key determinant is expectations, and expectations are temporal. A sudden spike in price will be seen as an anomoly, whereas a more persistent rise plays on the normal human tendency to linear extrapolation, and this requires time to become embedded.

The same is true on the flip side. If expectations of declining prices become embedded, there’s a risk of an anti-bubble. Again though, the formation of the anti-bubble requires two conditions; that lower prices bring lower demand and increased supply, and that this becomes embedded in expectations. Current policy is obviously designed to avoid the first condition. If it succeeds, no anti-bubble will form. If it fails, the passage of time risks causing the second.

As for the debt, we need to remember that what’s happening now isn’t so much the creation of new debt as the transfer of debt from private to public hands. It’s an open question at this point if and to what extent private debt expands once the immediate crisis is past.

Without this quantification I feel in the middle of a unprovable ‘beliefs’ debate.

YES YES YES YES YES

Their is no way out of the box. People take a half truth and make a full truth out of Mellons comment. Mellon’s way was the fast way out of the pain. Extremely intense. Buy pain, sell time feeling it.

Floundering indeed. .Gov risks itself as an entity in founding fathers form by continuing/accellerating the road it currently takes.

Look at Japan — they have stretched a popped asset bubble into a two-decade long morass. We are doing the same thing now, but starting with a worse balance sheet as a nation. Japan had room to borrow; FDR had room to borrow. We don’t.

We can take the pain in a few big doses and return to normalcy sooner, or a bunch of little doses that will leave us floundering for a generation.

I would add that the chambers are empty too.

No HELOC cash, tougher to get debt, and no stock market gains to prop up the economy. That is why I feel we are headed to a more severe recession. Those are all things missing, that existed during the past couple of downturns.

The only chamber with something left is government, but that one will go dry by February.