Paralyzed Fed, Economic Recovery Reality, The Emperor is Naked

TMO ^ | 5-5-2012 | TGR - David Stockman

[blam]

" Instead of hyperinflation or deflation there will be a major financial dislocation, which means painful re-pricing of financial assets. "

I don't understand this idea of re-pricing. I welcome your comments.

No Way Back

Prepare Now!

[refermech]

Your 200,000.00 house is really worth 50,000.00 and that is all you will be able to sell it for. That’s my take.

[blam]

"Your 200,000.00 house is really worth 50,000.00 and that is all you will be able to sell it for. That’s my take. "

Just houses?

I think he's talking about everything going down in price. And, if that's true, why will it matter? Wages and everything else will follow, right?

[dennisw]

I don't understand this idea of re-pricing. I welcome your comments.

Stockman is speaking round about and poetically but it means the price of your asset be it Apple, Intel, your automobile or your house is going down. Deflated. Some assets will go up ...maybe gold? Nebraska farm land? Land in Idaho away from the urban mobs? Troy Built rototillers will appreciate?

DS: My investing model is ABCD: Anything Bernanke Cannot Destroy: flashlight batteries, canned beans, bottled water, gold, a cabin in the mountains.

Once again speaking poetically but I get his point

[dennisw]

I think he's talking about everything going down in price.

No! You won't be shocked but the average American will be shocked by what assets go down and which ones go up. In an economic crisis like Greece has but over here

[blam]

"Troy Built rototillers will appreciate? "

LOL. I do have one of those...a 'Horse' model. It been used for four hours about 20 years ago.

[blam]

The Stall Has Arrived (Even Leftists Are Admitting It)

[familyop]

"Re-pricing?" In that instance, it means haircuts for investors. They get much less back. That's all.

"David Stockman: We are in the last innings of a very bad ball game. We are coping with the crash of a 30-year–long debt super-cycle and the aftermath of an unsustainable bubble."

That's about when our great leaders in business and government actually started moving much of our manufacturing overseas and telling the rest of us Americans that we're worthless, lazy, the overpopulation problem, etc.

Have fun. Enjoy the slide.

[Paladin2]

“My investing model is ABCD: Anything Bernanke Cannot Destroy:”

[Paladin2]

Own a house you don’t plan to sell.

[refermech]

Exactly, then value doesn’t matter. You have a place to live.

[section9]

One of the more fascinating examples of Stockman’s wisdom can be found in this example:

A house sold for about $29,000.00 on the average in 1971. 40 years later, it sold for close to $290,000.00, on the average, nationwide.

However, we as a nation, are not ten times more productive than we were in 1971. The house’s value was bid up by currency devaluation (e.g.: inflation). We are living through a vast, specultive bubble of enormous proportions.

There will be a valuation crash on material goods and on the currency such as we have not seen in our lifetimes.

BTW, this won’t be a great time to be Chinese.

[blam]

"There will be a valuation crash on material goods and on the currency such as we have not seen in our lifetimes. "

So...what do I want to be holding when this 'crash' (devaluation) happens?

And...why won't the Fed just inflate things away as so many have told us they'd do?

What make Stockman's ideas correct?

[kearnyirish2]

Housing prices and wages have fallen, but grocery staples and gasoline have risen (while the government continues to proclaim that we have no inflation).

I can’t believe the prices on some groceries, and am not surprised that businesses that relied on peoples’ discretionary income (such as restaurants) are getting killed.

[familyop]

"So...what do I want to be holding when this 'crash' (devaluation) happens?"

I wish that I knew a great answer for that one. Here's a poor answer. Real necessities will be in demand (e.g., food), but those are always risky (natural disasters, conglomerates using government to step on competition,...).

"And...why won't the Fed just inflate things away as so many have told us they'd do?"

Highly placed government employees and their non-government bosses/beneficiaries (NIMBYs, animal worshipers and associates) want to have more than worthless currency. Without a strong currency, they would also lose their regulatory influence over properties of others. But they'll lose influence without inflating, too, by being forced to lay off huge numbers of regulatory employees working for them. IMO, they're walking a tightrope.

"What make Stockman's ideas correct?"

Here's my take. Stockman shouldn't get all of the credit for seeing what's going on. We need to look around us and put ourselves in the shoes of others for the purpose of seeing what's going on outside of our own more secure and serene existences. Yes, there are large numbers of Americans who have been denied traditional options (like starting a small business, building one's own home, rejecting some of administratively decreed "fees," etc.).

After government and its favored, bipartisan constituents rob other constituents and obstruct business to certain extents, a critical mass of other constituents may get unhappy. The eventual, unhappy majority of constituents respond by working less, buying less, investing less, becoming politically more quiet, and so on.

People who have the freedom to start producing and selling can be more generous, but there are many signs that it might be too late for that. Very few are allowed to continue producing that way (without submitting to bizarre, contemporary social politics of being employed by global corporates or government offices). We're seeing new heights of hysteria in sponsored propaganda and efforts to convince the population that they have no rights or freedoms. The so-called "news" has been looking more weird each year for several years.

See Czechoslovakia and Poland just before the fall of the Soviet Union. There are perceived positions of power at all levels of government and business, but maybe none of us are really as powerful as we believe some of us to be.

There are also the crazy messages of fear/spite being disseminated from many of those we view as the "elite"--people in leadership and wealth--of various terrible disasters like overpopulation, famine, cosmic disaster,... Apparently, they think that the planet is not big enough for any of the rest of us. Or maybe they want everyone to panic and trigger some mad response on their part. Pathetic.

Anyway, IMO, we should arrange for ourselves, loved ones and maybe a few more to be alright and to get out of the way for a time. None of us who comment on FR are members of the "1%," and we know it. Let the communist/fascist 1%-ers fight each other for dominion over the universe without having us on their plantations to use as catapult fodder.

[familyop]

Here’s an example of some of the weird, hysterical “research” and “news” sponsored and administered by big shots. I’ve only been an amateur for the purpose of getting pictures of auroras, but it looks like a chance for a class M flare at best to me—not much of a world-changing event. We’ve seen several dishonest “reports” like the following over the last year.

Space weather expert has ominous forecast
http://www.freerepublic.com/focus/news/2880408/posts

[Praxeologue]

Stockman’s key assumption is contained in his hypothetical “if the bond drops by 2%”. I am not convinced that this will happen in the near future. The Fed and its allies have so many tools at their command, expanding every year, that it may be many years before a failed auction. Of course this is just lengthening the rope by which we will be hung and the pain will be that much greater for the delay. They are destroying the future. Meanwhile, and that could be a decade or so, we will all need to find productive things to do. As for investments, Stockman is right that everything is overpriced, with the exception of precious metals.

[blam]

"Meanwhile, and that could be a decade or so, we will all need to find productive things to do."

Yes...I've seen this 10 year time frame used before.
I find Stockman's comments most interesting because he seems to be placing a shorter (under two years) time until TSHTF.(as I read it)

Albeit, I agree with your 'kicking the can' down the road for years...with worse results but the conclusion the same.

[blam]

"Anyway, IMO, we should arrange for ourselves, loved ones and maybe a few more to be alright and to get out of the way for a time."

I agree...and, it does seem that more and more people are beginning to reach the same conclusion. Thanks for all your comments.

[Sirius Lee]

I took everything I have out or the market, save for a little play money that I could afford to lose. No debts, just "provisions".