Bernanke got it right – the deflation is coming from budget deficit that will depress the economy for decades
Special Correspondent
Jan. 18, 2007

The Social Security, Medicare and traditional budget deficit manifests the trouble ahead. The extra liquidity in the system is providing the ‘calm before the storm’. The debt level at the public and private levels are unprecedented. The demographics is tilting towards aging population. The scenario supports deep deflation as people have lost their purchasing power.

The depression from deflation will be extremely severe. The economy will eventually contract by 2 to 3% every year in the next fifty years instead of rising 2 to 3% that we have seen in the past hundreds of years.

The Federal and private debt servicing will trim the economic expansion by close to 4%. That is the root cause of the deflation.

Bernanke got it right – the deflation is coming from budget deficit that will depress the economy for decades
Special Correspondent
The Social Security, Medicare and traditional budget deficit manifests the trouble ahead. The extra liquidity in the system is providing the ‘calm before the storm’.
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Core Consumer Price Index points to accelerating deflation when correlated with commodity prices
Special Correspondent
The deflation is sector specific. It will cause decrease in US imports and hurt the Asian economies like Japan, India and China. Japan understands that. The Bank of Japan decided not to raise the rates.
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Housing prices will rally in a counter trend cyclical null move within a secular bear market and then fall apart because of innumerable foreclosures
Special Correspondent
The builders will start building again. The land prices will soar. The investors will be back with their credit based purchasing power. The housing market this summer will go crazy as sellers get back their advantage.
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U.S. wholesale prices swelled last month by 0.9% but the core inflation budged only 0.2% - reasons why deflation is here
Special Correspondent
Deflation is real and it is here. The stagflation is changing to deflation. Fed Reserve never accepted the fact the economy is faced with stagflation. Now they will refuse to accept that the economy is goin into deflation.
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Intel’s earning failure and possible anticompetitive moves another sign of tech stock collapse in 2007
Special Correspondent
. EU investigators recommended formal charges against Intel over anticompetitive moves. That is serious because that just signals trouble for the whole sector....
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A 68% surge in earnings in JP Morgan Chase is another sign of maturing bubble in M&A
Special Correspondent
Every bull market finally matures with exploding M&A mania. In recent days it happened in 1987 and 1999-2000.
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The second recession in the Internet sector is now led by user-generated sites - another dot com look-alike bust?
Specia Correspondent
After the dot com bubble and final gloom and doom, the second recession has started for the Internet sector. User-generated sites – the so-called blogs, video upload sites, and so on, lead it.
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Time to invest in land deals – like Centex and KB Home many developers has written off billions on the value of land holdings and options
Specia Correspondent
The developers are finally panicked. They are throwing land holdings and options in a slumping market.
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