$700 Billion "bailout" denied!

those kids look too well kept

more like this

I feel a song coming on

it was interesting to read about some of the concessions that had to me made in order for the bill to passed though, talk about corrupt!

but

back to

at least we don't live in Iceland

an.



or do we?

here's a quote just for you neil

"When everyone was extremely rich in Iceland - you know, last month, it was with money that they never have earned. Now those who were extremely rich are just normally rich, but they think they are poor."

kinda looks like Iceland is going bankrupt.

Dow down another 350 points last night

I'm loving these pics

update
Dow closed down over 500

Another classic pic:

here's lookin' at you harv

This picture series needs it's own thread, with them all in sequence. Do the gloom and doom ones, then show the bail out plan with everyone cheering, then show them again after its rejected.

Awesome.

very good

now can you go and do the nerd test please

kthnx

Do I really need to? You know I would win it.

hands down

oh and neil



a reply to you here

from a guy i know, "jesus was inflationary"

http://phirate.com/2008/10/what-would-jesus-do-about-economy.html

The New Zealand stock exchange has kept falling this morning after what is being described as a "runaway train of a sell-off" on Wall St overnight, with the benchmark NZX-50 index down 2.6 per cent.

The big Wall St sell-off turned the anniversary of the US stock market's peak into one of the worst days in Wall Street history , driving the Dow Jones industrials down a breathtaking 679 points and deepening a financial crisis that has defied all efforts to stop it.

It all took place one year to the day after the Dow closed at its record high of 14,164. Since that day, frozen credit, record foreclosures, cascading job losses and outright fear have seized the market and sapped 39 per cent of its value.

If you watch the Max Keiser video on "emergency rate cuts", you would see Afshin mention the independent reconstruction (by shadowstats.com) of the no longer released M3 data.

This is what they claim is the present depiction of M3.

The rich are rich for a reason…

They might lose more but they can afford to lose a lot more. While the rich are flying economy class, the poor will be fighting in the streets for potatoes and coal.

We have already seen several banks go under in the UK, luckily the scale is still small enough that the government can ‘easily’ cover any savers losses. Anything even medium scale however and there is nothing that any government could do. Remember total of Average Joes savings = multiple decades of any nations GDP.

Neil is dreaming of a world where everyone’s net worth is basically reset to 0. Sounds great if you’re young fit and healthy, and don’t really have anything to lose yet anyway, but the people who saved all their lives and suddenly lose everything aren’t just going to disappear. Someone has to feed, house and take care of them… somebody young fit and healthy

the person who helped educate and keep him healthy and survive to adulthood in the first place

What inherent value has gold?

Who will give the farmer supplies for free?
Who will work in the factory’s for free?

So halve the number of workers, multiple the number of poor by 10 - what does the new tax rate work out at? lol

Brian Gaynor: NZ also lured by Wall St honey pot

Hence why this situation should be taken more seriously. I recommend you watch this NR, created well over a year ago, before this actually happened. Where Max Keiser explores the 'carry trade' and Iceland's suspicious economic success, yet non sustainable and inevitable approaching collapse through utilizing such practices.

you know who's a shoe-in to ply him if a film were made about him don't you?

No? Does it involve Al jazeera?

But more importantly does it in any way distract from the truth espoused? His economic outlook is inherently Austrian, which is more where my interest resides. Be careful this doesn't become an ad hominem smear campaign.

Tom Hanks nah no smear campaign

I wonder if the bank economist is now with those kids wearing a gimp suit

To be honest I only just discovered Max and don't know a lot about him. I am more interested in the fact he was reporting on all this before it happen and has all the videos to prove it.

Worth watching despite his odd mannerisms and radical barrages he delivers sometimes, which I actually find amusing.

but he's asking the right questions which are fundamental really

my earlier query re irrationality of the market place still stands

Fundamental? The popular economic paradigm used by policy makers throughout the entire world has been inherently Neo-Keynesian with some moments of Supply-Side economics, during certain periods. But generally its been all about deficit spending, lowering interest rates below the market level in order to stimulate the economy et al.

Austrian economists have constantly been yelling at everyone, that it causes bubbles and not to do it. The Austrian Business Cycle Theory is considered an alternative and fringe interpretation of the business cycle in modern economics.

Irrationality of the market would really be quite minimal if we used specie backed currencies and Austrian economic rules, becomes the potential for irrationality of the market is significantly aggravated to a point of eventual probability when the system uses a central bank, socialized investment mechanisms, such as control of the money supply and interest rates, along with fractional reserve banking.

I had in mind his question

where is the money coming from?

which, likewise I'd like to know from this mornings news that the g7 nations intend to pledge



bearing in mind you m3 post earlier

Exactly, but protagonists such as Ron Paul and/or Max Keiser are not mainstream and are considered to be espousing heterodox economic positions. Max even considers himself a financial activist and both are considered radical and controversial figures.

Yes it’s true, there are quite a few different interpretations surrounding what caused the Great Depression of 1929. I have quite a few books and a lot of data compiled on this event, and have studied it so intensely, that to try and break it up into sections and describe every exact detail, would require posts so large, I doubt it anyone would read them anyway. You also need to have a clear understanding of the major differences between Keynesian, Monetarist, Austrian and Classical theory, the variations even amongst the protagonists of these major philosophies and all the different events that occurred and their respective chronologies; attempting to distinguish cause and effect relationships and all their different approximate contributory ratios. You also have differences in opinion regarding whether certain policies dragged it out and made it worse (especially regarding various New Deal policies) and what finally ended it.

But I will tell you this very simply, basing this entirely on my knowledge and understanding of economics, despite it not being a truly empirical or exact science, I am still fairly adamant; that if this last ditched multi-trillion-dollar bailout plan, pledged by the g7 nations doesn’t work, and has the effect of pouring oil onto fire as speculated. The possibility of the world experiencing another great depression, regardless of the fact, the economic dynamic is quite different now to what it was back then, is all the more real in becoming an actuality. I put it approximately around a 70% to 30% chance of a major world monetary collapse, to a cushioning effect and slow and strenuous clean up phase, due to the excess liquidity created as a consequence of this bailout plan ‘ratio’.

I really hope I’m wrong. The implications of this are huge either way.

so should we stock up on silver, gold, shotguns and ammo, and tinned food, Rival?

Sorry for the slow response, dealing with way too much bullshit at the moment, um? “shotguns and ammo”? No, that’s taking things a bit far in my opinion, but investing into precious metals? Probably a good idea, though reconfirm this with Peat who is far more involved in that part of the equation. While I don’t think we will be as bad off as 'some' countries if this plan fails; as NR’s statistics contend above, our banks need to refinance up to $90.1 billion of overseas debt before the end of next month. According to recent statements made, the Reserve Bank of NZ has liquidated assets ready for crisis management, but I don’t know exactly how much they have available and whether it would surmount to assisting various entities in managing an amount of debt that high.

But history is most certainly applicable here, in regards to evaluating what might happen. I would say at the worst, more countries will end up taking their currencies off dirty float mechanisms and fixing their currencies to either 1) other world currencies that seem to be stable (like Iceland just attempted but still found countries refusing its currency as legitimate payment for goods required to fill supermarket shelves) or 2) the governments of the countries directly implicated (and who really isn’t?), will probably introduce new and alternative currencies that are fixed to certain items. And not just gold or silver, but the potential for all sorts of crazy commodities, such as linen, silk, leather, wood, porcelain, coal, aluminum, cotton, wood, water, rice, wheat amongst various others I can only imagine. New Zealand may consider fixing our currency to something that is retaining its value locally, while at the same time attempting to help an important sector of our economy. An obvious choice might even be diary product, such as cheese.

But massive unemployment rates and people loosing their homes, having no food on the table or energy, riots on the street? No, I don’t actually envision this as being anywhere nearing that degree. Well at least not for us. I actually think we would be one of those nations that are comparatively better off despite our debt, we will work through it by negotiation, sacrifices will need to be made but there will assistance. But yes, there will probably be some suspensions in payments and the implications caused surrounding these, which is kind of difficult to predict at the moment to be honest. It’s this foreign debt held that is a major problem of concern. But that’s assuming it does go all pear shaped, there still being that chance of course, that this last ditched effort, will restore confidence. Just realize this though: with each one of these failed bail out plans, the probability increases for general loss of confidence in monetary legitimacy; especially when a currency is fiat. So keep your eye on this situation, that’s what I am advising friends. Be watching when this bail out plan comes into action at least.

If one goes back to reanalyzing the inflation of the Weimar republic and it’s well documented crash in the mark. During 1922 it apparently stabilized at about 320 marks per American dollar. At the same time, various conferences were being held between western nations and Germany over reparation repayments and its financial instability. When these meetings produced no workable solutions, the inflation changed immediately to hyperinflation and the mark fell to 8000 marks per dollar by December. So the triggers can be the results of reported negotiations and the psychological implications of their failings. The inflation reached its peak by November 1923, but ended when a new currency, the 'Rentenmark' which was introduced with a fixed value backed by land and industrial goods. The new currency was accepted and the hyperinflation ended shortly after, so studying these aspects, amongst various other historically related incidents (such as with Argentina) seem applicable here, as does researching the various implications associated with demurrage.

or coal?

Potentially others may yes, but not us if I have anything to say about it.

biggest up day ever.


O frabjous day! Callooh! Callay!'
He chortled in his joy.

(Lewis Carroll)

big dipper ascendant in the firmament

the volatility continues to be astounding
after peaking at 9900 it 2 in the morning it fell to 9100 but then in the last hour its gone up 200 pts again.

200 pts used to be a big movement for a whole day.

Volatility indeed, the market seems bipolar, lets just see how the it holds out, with all this excess money flying around.

BusinessWeek compares NZ to troubled Iceland
1:00PM Wednesday Oct 15, 2008

New Zealand is among 13 nations named by BusinessWeek as most at risk from the global financial crisis.

The article compared New Zealand to Iceland because of its heavy dependence on foreign money to fund its current account deficit.

"Like Iceland, New Zealand was a favourite of investors playing the yen carry trade. And like Iceland New Zealand is hurting," the American magazine said on its website.

It noted the fall in the New Zealand dollar and that the New Zealand economy is already in recession.

The New Zealand dollar hit new post float highs around US82c this year but has fallen in recent months and was US62c today.

BusinessWeek said that unlike Iceland, New Zealand's banks have strong support because they are mostly controlled "by bigger banks across the Tasman Sea in Australia".

The government is also in a stronger position because it has run budget surpluses until recently.

"Even with the country in recession, the government is likely to continue running a budget surplus," BusinessWeek said.

Iceland signalled on Sunday it was growing increasingly open to the idea of seeking International Monetary Fund help to pull the country through its worst economic crisis.

Iceland was forced to take over one major bank after another, to shut down its stock market and to abandon attempts to defend its free-falling currency.

- NZPA

Eh?

My overall impression was that the impact on NZ had been pretty minimal so far compared to other countries.

Storm in a tea cup?

That's not to say that some tough times don't lie ahead but lets not jump the gun.

you cant push a peice of string.

It's interesting to see Gordon Brown at the EU summit talk about this problem emerging from America, but it's not just America's subprime lending and associated deceitful market practices, but the cheap credit available from countries like Japan, Switzerland and America, who have all held low 'base point' interest rates and the arbitrage and increase in the money supply it has created as a consequence.

The entire economic system needs scrutinizing.

Sounds like its going to get it...

I like my job

Just stop paying your mortgage (not just Wall St getting bailed out)

http://www.signonsandiego.com/uniontrib/20081010/news_lz1e10schiff.html


If your mortgage does become the property of Uncle Sam, the growingly popular impulse to “just walk away” should be replaced by “just stay and stop paying.” No one will throw you out. After a few months, or years, of living payment free, you will get a call from a motivated government agent eager to adjust your loan into something affordable.

To bolster your bargaining position it will help to be able to claim poverty. As a result, if you have any savings, spend it soon, before they call. Buy a bigger TV, a new wardrobe, or better yet, take a vacation. After the hardship of spending all of your refi cash, you probably deserve it. If you have any guilt just remember, Washington argues that consumer spending is the best way to stimulate the economy. Living beyond your means is a patriotic duty.

The wisdom espoused by the fathers of economics, such as Adam Smith, Ricardo and Jean-Baptiste Say seem lost on us. This system seems to penalize saving and reward excessive spending and debt accumulation.

It just doesn't add up?

At the moment what we seem to be observing is an extension of Keynes' “comprehensive socialisation of investment” but bastardized in far more serious manor. How can it continue down a path which seems inherently contradictory to basic market fundamentals and contrary to truly resolving this problem?

it's probably because of a failure to comprehend fundamentals, rival, brought about by a systemic shock

ahh btw I wish you would resolve the difference between manor and manner

Your apparent commitment to pointing out my occasional literacy confusion and often trivial spelling mistakes; sometimes comes across, as exposing a potential psychological inadequacy, involved deeply within the make up of your character. I suspect it manifests itself, disguised as a general lack of social aptitude on the forums, but could, quite possibly, be a mistaken assumption attributed by the best of us. Frankly speaking though, it has always seemed to be your “manner” now, right NR?

And given habitual responses are often ingrained deeply within the psyche, from a previous history of conditioning; one could hardly expect a sudden alteration in behaviour, made simply from reading a carefully contrived response, suggesting such a possibility either, now could they? Nor am I the type to seek allowance for the occasional outcomes of my neurological disability; so I tend to par on the side of automatic tolerance, combining the variables detailed above into a single equation; the computation of which, allows me to consider your trait easily overlooked and marginalised.

Regardless and back to the topic at hand, it seems the powers at be have committed themselves to a very determined strategy, which prioritises everything towards facilitating the systems lending capacity, over the risk of inflationary anomalies created as a consequence. Hard calls to make aside, I still find this sole reliance on lending, more like an act of desperation, rather suspense and risky to place faith in.

acceptable usage

gee and up to that point I thought you were on topic...

and a good read from Michael Laws in plain English

http://www.stuff.co.nz/sundaystartimes/4730666a22678.html

Way to miss a point.


The market operating in this present form cannot be trusted, true, but then Michael Laws’ assignment of blame seems disproportional, as the problem is more one of irresponsible policy, the scope being more suitably focused on specific institutions. To elaborate on this more, true protagonists of laissez fair, would blame the "socialisation of investment" (i.e. government intervention) not so much the markets natural operation.


He goes off on a tangent here because whether humans are inherently pure or impure really confuses the issue at hand, which I have already alluded towards above. He also makes bold claims about the market offering no concept of service (blatantly a false statement) or avenue for altruism to flourish, which seems problematic, due to: 1. observation and direct evidence of philanthropy and 2. society and the market requiring morality (which has sacrificing behavioural requirements inherent within its operation), in order just to function. While one can most certainly argue that markets favour self-interested behaviour and place emphasis on profit (completely understandable given this is a required to survive in the market), this argument is really more an aspect of degree, rather than being about none-at-all.


If one was to judge a systems success based on assessing comparative changes in our living standards, I would say the market succeeds more than it fails, and that the magnitude of these self-corrections (causing carnage and calumny) are exacerbated greatly through institutions corrupting the markets operation as a consequence of interference. For instance think about the manipulation of interest rates, causing the “carry trade” and the eventual “unwinding” that will eventuate in global financial markets, as a consequence.

NR and those enjoying the Sad Guys On Tradig Floors pics - there's a website you'll love

http://sadguysontradingfloors.tumblr.com/

for the theorists, what do you make of this article?



http://www.monbiot.com/archives/2008/11/18/clearing-up-this-mess/

Yes i would like to see the experts response too.

A damn interesting article to read.

Helps explain why the money system is stacked in the yanks favour.

This is one of the reasons why Malaysia decided to refuse IMF assistance during the 97-98 Asian financial crisis.

They copped a lot of flack then for choosing to impose more controls as opposed to liberalising their markets as with the IMF’s prescribed policy. Although one of the reasons underlining the approach was, in a sense, nationalistic (the government then did not want to lose its economic sovereignty to foreign interests which it couldn’t control) – I think what some people missed was the point that unfettered capitalism isn’t a perfect solution (although even now, I don’t think that this is a proposition that many will accept anyway).

In saying that though, I don’t agree with Keynes’ solution per se. It almost becomes a disincentive for nations to accumulate a surplus and it introduces a sort of ‘funnel’ which forces nations to export capital even when it is to a destination which may be sub-optimal. Apart from that, it also doesn’t address the issue of control and power within any new institution that may be formed to govern the world’s financial and economic activities.

"The problems we face today cannot be solved by the minds that created them" Albert Einstein

another huge rescue plan announced by the US

good times - if you are one of the finance coks whom the US govt favours - ie the creators of this mess

I jut hope they let the big 3 stew in their collective juice

that is one crisis entirely due to lousy business decisions that ought not to be rewarded with tax handouts

even the officials dont know what is happening to the money !!




http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10550292

Noam Chomsky

I'm a bit confused by this Bob, the first paragraph says the methods are the same but thats not what follows.
I think I get the point that the West imposes (seemingly ) harsh (right wing type) solutions on the 3rd world but is taking the soft option on itself now but its not that well expressed somehow. Got any links coz it is a brilliant irony.

probably a typo as it don't make total sense - I'd think that:

"approaching the crisis is exactly the same as the model that they enforce on the Third World when there is a crisis."

should be

"approaching the crisis isn't exactly the same as the model that they enforce on the Third World when there is a crisis."

or seomthing along those lines - its the transcript from a TV interview so a mistake could creep in (??)

yeh pretty gloomy stuff NR

could start to get you down if you let it

but life goes on.... and not everything is about money... its actually about the sex and the drugs , hey come to think of it drug prices havent come down!!! lol I'll have to have a little discussion about deflation with my dealer.

smoke me if you got em

also of interest is how many compromises Obama.co had to make in their recovery bill to get it through congress (with the senate to go), 25,000,000 in Green Incentives gone... etc

If anything is going to fuck the US (and thus worlds) attempts at recovery it will be the US Political System

i kinda don't know this subject very well, so please dont shoot me if this comes out totally wrong haha...

i just lost my job due to "downsizing" cause of the climate at the moment. i was talking to someone, who said that if it gets really bad, 10% of the population will be without a job...

not that bad, that still leaves me a 90% chance of getting another job

im not sure sure you understand statistics.

doesn't matter

I understand what he's saying

it's a brilliant observation

Controversial filmmaker Michael Moore is calling for current and former Wall Street bankers to help him make a film about the financial crisis, which he describes as the "biggest swindle in American history".

willing swindlers willing victims

not all American taxpayers are willing about the way their future is getting mortgaged NR

civil unrest is something that the wrold bank and other such organisations have commented about and fear big time

will the people rise up... and smash the cunts that have morgtgaged their and future generations prosperty...

watch this space

with some of th ponzi schemes coming out of the woodwork you'd think so

http://www.cnbc.com/id/30108264/?slide=9

If this amount of money was denominated in $100 bills, the sheer volume of cash would be enough to fill to capacity 62 high capacity railroad freight cars

These "spatial" metaphors really annoy me to be honest

It's so condascending to the public that these news organisations feel any need to illustrate how much X amount of dollars is by resorting to these cheap zomg-if-you-piled-all-that-moniez-up-it-would-reach-the-end-of-the-galaxy tricks.

We understand numbers, people :/

This is a fasinating time to be studying economics. It's one of the greatest case studies we will have of our time and it will change philosophy and government policy in years to come, depending on the outcomes.

What interests me especially is the delay in hyperinflation. Not that I completely believe the Government statistics or am easily fooled when they try to destract us by only focusing on core inflation. But still, the amount of excess liquidity in the world markets is enough to cause this effect and yet it seems to be sustaining at the moment.

Personally the more I study the more I think fiat currency, artifically low interest rates and floating exchange rates have distored the global economy, caused a shrinking of the middle class (widening the devide between rich and poor) and exuberated low productivity in the markets. I keen to study more on hard money, or currency backed by specie or commodities.

American unemployment rate now at 8.9%, its highest level since 1983.

The worst in the EU is Spain, now at 17.4%

The rate of unemployment is slowing though, April saw the lowest increase in some 6 months.

Which may suggest things are starting to stabilise.

It could do, but the problem with serious recessions is the effects tend to come in waves, making predictions difficult. Generally speaking, the higher the rate of unemployment, the less disposable incomes will be expended (representing slow velocity of money) in upcoming quarters and thus can actually increase the chances for a further unemployment increase. It just depends whether this is the bottom or not.

The Great Depression of 1929 for instance, had three waves of banking failures over the 1930-33 period, and while the Federal Reserve Bank of America is pursuing a completely different policy to what it did during the early 1930's (which was actually a contraction of the money supply and negligence towards acting as a lender of last resort, allowing banks to actually collapse) it is actually supplying liquidity this time and attempting to prevent bank insolvencies.

Despite the arguments which can be made surrounding moral hazard, the more serious implications of this change in strategy, is that all this additional money in the system could lead to creating a hyperinflationary depression, rather than a deflationary depression (there can be different types) which is what happened during the 1930’s.

Hyperinflation is far more serious in implication and can cause the anomaly known as stagflation, which is a simultaneous rise in slow growth, high inflation AND high unemployment. If this happens I would expect interest rates to increase, which could cause more foreclosures, defaults on payments and so forth. So I think it's too early yet to count this slowing down in the rate of unemployment, as indicative of stabilization or green shoots. It's noteworthy though and does make for interesting discussion, i.e. is this just a trough or true stabilization?

Something that concerns me about dealing with a problem like curbing inflation/hyperinflation is you have a few macroeconomic options available, but each with their own consequences.

1. You can increase interest rates to attract savings back into the banking system, but which will also cause some of the problems I have mentioned above, i.e. it will increases the cost on loan repayments, and as a consequence the possibility of more foreclosures, bankruptcy of businesses and increasing unemployment et al.

2. You can sell T-bonds (treasury bonds), which take time to mature (think 30 years) and are supposed to appreciate in value as they near the end of their term. However if they are not inflation adjusted, the inflation over that same time period essentially eats into their appreciation in value, making them less attractive to hold.

Now selling T-bonds can be used to finance war, as the money handed over for them goes directly to the treasury, which can then disperse the money accordingly towards the Pentagon et al. But T-bonds can also be used to curb inflation, as the money handed over for them, can then be taken out of the economy (i.e. operation) and placed back into storage. The problem is, many countries, especially China has already purchased loads of these T-bonds, which helped fund America's “War on Terror” and essentially this negates the possibility of them being used to curb inflation. Of course they can print more T-bonds, but they risk saturation of the market (if it isn’t already), which turns them into junk bonds.

3. They can also use wage and price controls, where the government passes legislation that outlaws the market increasing wages or prices past a certain base year level. This was used during WWII and it can work, but it will cause various anomalies in the efficiency of the market, because price controls distort important signals, like when something is becoming scarce for instance, its price is supposed to increase, signaling that people should cut back on consumption et al.

4. The government can increase taxes to decrease people’s disposable incomes and thus curb their spending and the breakaway inflation that results, albeit at the cost of causing other problems, like rising unemployment.

5. Back your currency with a valuable commodity like gold, which will in this case probably cause gold to increase in value and will also collapse the Breton Woods II standard. Now backing a currency with a commodity always curbs inflation, but realize this, America only has 8000 tonnes of the worlds gold reserves in Fort Knox and countries like India hold 13,000 tonnes of the worlds above ground gold reserves. Some of these developing countries could suddenly become very wealthy.

Either way these policies will cause negative consequences for America…

I don't see any evidence of hyperinflation taking place though. All the important things seem to be coming down in price as they should, at least in this part of the world.

Part of the reason I enjoyed the Peter Schiff montage so much was because it pretty much sumed up my own thoughts on the entire economic crisis.

Which is that it was a necessary and inevitble response from a brkoen and abused system that is now attempting to correct its self.

Its highlighted a lack of regulation in the system and exsposed a high level of abuse that has been going on far far too long. Its reminded the whole world that the real money comes from production and hard work not virtual exchanges of stocks and bonds in no mans land that can disappear over night.

I could go on for a while here but I think in the end their will be a lot of good to come out of this 'crisis'.

This is the last part of Peter Schiff's prediction that I am not so sure on. I can't say whether we will definitely see hyperinflation or not, I mean I am expecting to see it due to all this extra liquidity, but it's not coming, am I simply too early?

It think it indicates that we still don't have a complete understanding of economics yet, there are simply too many things we can't test. All we can do is look at small cause and effect relationshipts and attempt to put them together into a complete theory. It's an imperfect science, some would even argue it's not a science at all.

So despite having some sound princples I suspect Austrian Economics still needs more work. I think you and Peat might find this interesting, I think this guy takes a little far the other way mind you, as Peter Schiff has been correct about the T-bonds, just not the holding foreign assets, decoupling, hyperinflation parts etc...

http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html

we're still in deflation caused by deleveraging. so not much inflation at present - wouldnt expect it yet.
But oil and gold are quite strong and they represent anti USD and anti fiat currency sentiment.

Can you place the term deleveraging into context for me Peat? Do you mean the slashing of prices to attract sales?

Actually I found this, which is a good read.

http://www.creditwritedowns.com/2008/06/de-leveraging.html

So the shock causes deleveraging, which then causes deflation. And this is the stronger force than the expected inflation. I think this needs to be added into Austrian Business Cycle Theory.

However after the deleveraging wave starts to stabilize, can we then expect the excess liquidity to become the stronger force and cause inflation, or will deflation continue due to the slashing of prices to gain much needed equity?

Classical economists believed that recessions were typically self correcting as the slashing or wages and prices, along with the liquidation of ill performing assets, would lead to a recovery. So it makes me wonder, would deleveraging have occured regardless of the excess liquidity being pumped into the system. I'm thinking yes.

Interesting...

i havent read your link yet Rival, but deleveraging is simply people/corporations pulling back their debt:asset ratios globally on a massive scale. It consists of me paying back my mortgage faster than I need to (and hence not consuming as much), it consists of the Icelandic banks going bankrupt and having some of their assets sold to reduce their debt ;
http://www.radionz.co.nz/audio/national/sat/2009/05/09/robert_wade_the_iceland_meltdown ;

it consists of Fletchers and Nuplex and many others on the NZ stockmarket issuing more equity even at a discount to (low) market prices so they can repay debt ;
it consists of a massive glut of property being held by banks in the US (waiting to be sold to repay debt) ; the list just goes on and on how in the current environment everybody hates debt with the same passion they loved it less than two years ago.

Its effectively a massive reduction in the money supply hence it is deflationary and by all accounts dwarves the governments attempts to counteract it with their TARP's and their nationalisations etc.

see this for a current perpsective on 'inflation' now : http://www.incrediblecharts.com/tradingdiary/2009-05-16_economy.php

read your article now Rival. yes it says the same but better of course

note in the last section of the incredible charts trading diary how long dated bonds yields are rising though in fear of inflation in the future.