Fed knows disinflation or deflation is in control of the economy – the moment the liquidity disappears, the GDP will fall off the cliff
Special Correspondent
Feb. 1, 2007

It was an interesting day. The economy sounded strong with a robust growth of 3.5%. Even US President George Bush came out and celebrated in Wall Street. One would expect US Dollar to rally and gold to slump. Believe it or not, the opposite happened. The gold jumped and dollar got hammered against all major currencies.

What does that mean? The interpretation of this is simple. The Economy is on life support. The oxygen is the credit driven unprecedented liquidity. As long as indication is there that the patient (economy) is responding to oxygen (liquidity), the monitoring doctor (gold) is happy.

Gold market is just watching how the economy is reacting to extra doze of credit balloon – the liquidity.

People are buying all kinds of assets on credit. Even domain names are getting traded on credit. Soon there will domain names that you can buy on mortgage. Well if can buy real estate for millions, why not the cyber estates?

Fed knows disinflation or deflation is in control of the economy. The moment the liquidity disappears, the GDP will fall off the cliff.

Personal income and personal spending will rise on credit driven liquidity but a fall in dollar index and rise in gold price will confirm deflation is the main theme
Special Correspondent
It happened in 1929. It happened in 1980s in Japan. It is happening now in US, Europe and Asia. The scale is the biggest in Asia.
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ISM Manufacturing and ISM Prices will indicate disinflation that is decelerating to deflation
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Like Chicago index, ISM Manufacturing index will fall below 50. The ISM Prices index will fall to 46 from 47.5 in the last month’s data. Both will show deflation is in full force.
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Mortgage defaults are the early indication of deflation in overall economy – stock market ready to crash any time
Special Correspondent
Mortgage defaults are the early indication of deflation in overall economy. The stock market is ready to crash any time. The complacency level equals that of 1987.
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Fed knows disinflation or deflation is in control of the economy – the moment the liquidity disappears, the GDP will fall off the cliff
Special Correspondent
Gold market is just watching how the economy is reacting to extra doze of credit balloon – the liquidity.
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What Michael Dell must do to revive Dell?
Special Correspondent
He must make Dell listen to customers again. He must not use Indian outsourcing help because that is what killed Dell’s charm. Now small businesses are skeptical about Dell and Dell Financial.
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Google's net nearly tripled, helped by improvements in its search-ad business but why is the stock falling after hours?
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The stock is falling after hours. The expectation level was high. The concept is nothing new in Wall Street. Buy on expectation and rumor and sell on the actual news.
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Construction Spending increased by 0.1% - a recovery in real estate and new construction is in place
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The builders were nervous. They got rid of their inventory with attractive prices, incentives and more. Little did they know the economy is in the process of recovery. After a soft landing, the economy is expanding again...
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