Category — Deflation

If this doesn’t sound familiar your name’s been in the obits.

Markdown of dong, the Vietnamese currency, seen as act of desperation

Vietnam lurched closer to a currency crisis yesterday as the Government cut the official exchange rate to a record low. UBS analysts said that the country’s economic profile was more extreme than that of Thailand on the eve of the 1997 Asian financial crisis.

As well as severe concerns over prospects for the dong, some observers see signs that Vietnam faces the growing risk of a banking crisis. They say that investors should be aware of a potentially drastic blow to sentiment when views on the entire region are fragile.

Edward Teather, UBS economist, said that if Vietnam were to unravel, investor sentiment and financial markets in Malaysia, Singapore, Thailand, the Philippines and Indonesia could all take a knock. [snip]

Analysts said that the rising risk of a sudden and crippling depreciation comes as the cracks in Vietnam’s vaunted “economic miracle” have grown too large to ignore. Only 18 months since Vietnam entered the World Trade Organisation, inflation is running above 26 per cent and the country is facing a swollen trade deficit that dwarfs those of its SouthEast Asian neighbours. [snip]

Investors have deserted Vietnamese shares, sending the benchmark index down more than 60 per cent since January and giving it the status of the world’s worst performer in the past year. Soaring commodity inflation, particularly in food and fuel prices, has hit Vietnam many times more fiercely than it has the rest of Asia. Now, Vietnamese lured from villages by the promise of work in booming new factories are finding the pay inadequate and are striking for better salaries.

In the above para, change Vietnam to the United States. Sometime, from August to next April the food and fuel inflation will hit hard. If the GOP keeps control of the Senate it’s going to be bad, if the Democrats win it will be ruinous.

Liberal economic equality indubitably delivers one item: universal suffering.
Contrary to the unremitting rant from the politicians blaming the President for the economy, all are getting a hearty peek at just how little control he has over the market.
Congress, on the other hand, does make monetary policy since all fiscal legislation starts in the house. Here is the result of their meddling in business affairs.

Bernanke expects bank failures

Federal Reserve Chairman Ben S. Bernanke yesterday said for the first time that he expects some bank failures as a result of the spreading financial crisis, while consumers as well as banks will bear the brunt of what could be a protracted economic downturn.

J.P. Morgan Buys Bear in Fire Sale,
As Fed Widens Credit to Avert Crisis

Pushed to the brink of collapse by the mortgage crisis, Bear Stearns Cos. agreed — after prodding by the federal government — to be sold to J.P. Morgan Chase & Co. for the fire-sale price of $2 a share in stock, or about $236 million.

Bear Stearns had a stock-market value of about $3.5 billion as of Friday — and was worth $20 billion in January 2007. But the crisis of confidence that swept the firm and fueled a customer exodus in recent days left Bear Stearns with a horrible choice: sell the firm — at any price — to a big bank willing to assume its trading obligations or file for bankruptcy.
“At the end of the day, what Bear Stearns was looking at was either taking $2 a share or going bust,” said one person involved in the negotiations. “Those were the only options.”

The lowering of interest rates causes a bigger problem than it fixes. When interest rates on T-Bills and bonds drop, investors move to positions paying higher returns more or offer a “flight to safety.” To buy metals or energy such as gold or oil, they shed USD, which increases supply and ebbs value.

Americans are feeling this as they get lower interest of savings/investments while commodities rise in price. Look at gold, oil gas and food for the results. Beyond the current travails are the future adjustments as inflation rips through the financial system.
I want the reader to speak to what they think will occur. I might be wrong after all.

Dollar Doomsayers Draw
Signs From Bernanke Rate Cuts

March 17 (Bloomberg) — Ben S. Bernanke’s interest-rate cuts have touched off a vicious circle of doom for the dollar.

The Federal Reserve reduced the rate on direct loans to commercial banks by a quarter-point to 3.25 percent before Asian financial markets opened today. It will likely lower its target rate for overnight loans between banks tomorrow to at least 2.25 percent from 3 percent, according to futures traded on the Chicago Board of Trade. Lower borrowing costs work against the dollar by making fixed-income securities issued by the government less appealing to global investors.
The relative return on U.S. assets is not attractive enough and we have moved back into looking for dollar weakness,” said Robert Robis, a bond fund manager in New York at OppenheimerFunds Inc., which oversees $260 billion. Robis last month was betting the dollar would rally versus the euro.
If that weren’t enough to make bears out of bulls, the weakest dollar since at least 1971 based on a Fed trade-weighted index is helping push oil, grains and metals, which are priced in the U.S. currency, to record highs. That in turn is causing economists to lower growth forecasts for the U.S. and preventing central banks concerned that inflation is accelerating from cutting interest rates, further undermining the dollar.

As I type this, world markets are dropping over the Bear Sterns failure.
This too shall pass, but when it does, hyperinflation will be the 800 lb. gorilla entering the room. We certainly live in interesting times. (Ancient Chinese curse)

Zimbabwe won’t have anything over us.
Ever hold a $10,000,000 dollar bill? One of those will get you a dollar meal, if you hurry up and buy it.

Zimbabwe bank issues $10million bill - but it won’t even buy you a hamburger in Harare

[snip] The central bank of the southern African country has a issued a 10million Zimbabwe dollar note. The move increases the denomination of the nation’s highest bank note more than tenfold. [snip]

U.S. stock futures point to major decline on re-open

LONDON (MarketWatch) — If futures contracts traded on a day when U.S. stocks weren’t even due to open are anything near accurate, then markets will be in for a major decline on Tuesday, with concerns about bond insurers and the health of financial institutions dragging markets lower.

[snip] The rescue plan presented by President Bush last week in a bid to help the U.S. avoid recession also wasn’t well-received by markets.

“Ambivalence over Bush’s rescue plan for the U.S. economy was the trigger of this rout,” said Martin Slaney, head of derivatives at GFT Global Markets. [snip]

Black Monday as biggest FTSE crash since 9/11 wipes off nearly £60bn in shares

[snip] It is also the worst start to the year for the stock market since records began in 1936. “I smell the acrid stench of fear and uncertainty,” said markets commentator David Buik of BGC Partners. European markets also tumbled.

The fall in the Footsie came after figures revealed a record government borrowing deficit for December of £7.8billion. [snip]

FTSE fall wipes £77bn off shares

THE London stockmarket was in freefall today plumetting 5.5 per cent - the biggest fall since 9/11 terror attacks. [snip]

[snip]The fall came as Asian markets tumbled overnight following losses for the Dow Jones Industrial Average on Friday, when investors were left unimpressed by the US Government’s tax-relief plans to spur on the economy.

Investors dumped shares because they were skeptical that an economic stimulus plan President Bush announced Friday would shore up the economy that has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

They get to do this again tomorrow

Pessimism Over US Stimulus Plan

“People are certainly nervous about a potential recession in the U.S. spilling over to the rest of the world,” said David Cohen, Director of Asian Economic Forecasting at Action Economics in Singapore.

“Maybe there’s still some wariness about politicians are able to come up with a compromise and act sufficiently quickly” on a stimulus package, Cohen said. “I think the impact would be marginal anyway.”

Spurting through this economic cadaver is the fear of overextended sponging by regimes of the various countries. Every dime spent is for personal edifices, social engineering and/or for vote buying.

Liberals/communists/Fascists/Progressives see this as a way to destroy this and other anti-socialist countries. Debase the currency and you have old Rome. Why the so-called conservatives do this, I cannot explain.

The stock markets are telling us they are drowning and a drowning person will grab a turd to stay afloat. What does the White House, complicit with Congress do? Of course, they tossed in the entire sewage treatment plant.

We cannot meet the expense of our extravagances now. Bush et al endorse a bailout using $145 billion more. ($145,000,000,000.00) Matters only get worse with this fiscal help.

You want to blame someone. Don’t look around the country for a target; look at YOUR Rep. and two Senators. Don’t you dare look somewhere else. Democrats voted for the porking of the budget. Republicans voted the same excessively large sums for themselves. Congress sets the banking laws, which tell the banks how much is kept in reserves for write-offs. Banks were racist if loans were not made to sub-prime borrowers (financial redlining). The borrowers could barely pay back the loans before the rates went up. Toss in speculators, sprinkle liberally with greed and prices went up beyond reasonable value.

Learn a new word:Deflation.

This is a McNasty since years go by before values rise up to where they once were.

Another Keating Five Show

I can understand Prog/Donk moonbats keeping this insanity going; they do not like our system. Why do the rest of you keep putting these same criminals back in their seats.Yes, criminals, this behavior rises to the level of malfeasance of office. They are stealing from the future to buy votes now.

It is coming close to the time to put a spark in the flashpan. Before they strip away the 2^nd Amendment and make all chattels to Washington.