Comments on: Top 10 Economic Predictions & Forecasters for 2008 http://www.chartingstocks.net/2008/11/top-10-economic-predictions-forecasters-for-2008/ REAL Stock Market News and Insight Fri, 20 Nov 2009 20:41:58 -0700 http://wordpress.org/?v=2.8.4 hourly 1 By: chartingstocks1 http://www.chartingstocks.net/2008/11/top-10-economic-predictions-forecasters-for-2008/comment-page-1/#comment-82 chartingstocks1 Tue, 02 Dec 2008 21:22:39 +0000 http://www.chartingstocks.net/?p=245#comment-82 Thanks for the question Jing. I think we still see liquidity problems because the vast amounts of capital has gone into the hands of only a few. Further, even with the new capital injections, large banks are not willing to assume the same risk as they did in 2005 and so we're seeing the contraction in credit expansion (liquidity). We've experienced the largest credit bubble that has ever been see throughout any nation in history. The US was consuming more than any nation in history (72% of GDP). It wasn't sustainable and we're going to have to adjust. To answer the second part of your question - Yes, the focus was on inflation until mid 2007 as the weak dollar drove up the price of food, oil, rent, etc. Though there were deflationary pressures building with the decline of home values. The declining asset prices have not spread through to the equity and credit markets. The greatest source of household wealth in the US was first the home, and second the retirement accounts. Almost half of that wealth has disappeared and so the spiral begins. People will spend less. Companies will spend less. Jobs will be lost, etc. I do think that we're going to see major problems in the US dollar - the effect of printing $8 trillion. People bought dollars recently because they were deleveraging there foreign assets(selling), not because of fundamentals. I suppose that the end game scenario would be continued deflation in asset prices and rampant inflation in food, gas, etc. That would wipe out the middle class. I hope that we aren't going down that path. Tell Shishang I said hi. ;) Thanks for the question Jing. I think we still see liquidity problems because the vast amounts of capital has gone into the hands of only a few. Further, even with the new capital injections, large banks are not willing to assume the same risk as they did in 2005 and so we’re seeing the contraction in credit expansion (liquidity).

We’ve experienced the largest credit bubble that has ever been see throughout any nation in history. The US was consuming more than any nation in history (72% of GDP). It wasn’t sustainable and we’re going to have to adjust.

To answer the second part of your question – Yes, the focus was on inflation until mid 2007 as the weak dollar drove up the price of food, oil, rent, etc. Though there were deflationary pressures building with the decline of home values. The declining asset prices have not spread through to the equity and credit markets. The greatest source of household wealth in the US was first the home, and second the retirement accounts. Almost half of that wealth has disappeared and so the spiral begins. People will spend less. Companies will spend less. Jobs will be lost, etc.

I do think that we’re going to see major problems in the US dollar – the effect of printing $8 trillion. People bought dollars recently because they were deleveraging there foreign assets(selling), not because of fundamentals.

I suppose that the end game scenario would be continued deflation in asset prices and rampant inflation in food, gas, etc. That would wipe out the middle class. I hope that we aren’t going down that path.

Tell Shishang I said hi. ;)

]]> By: Jing Miao http://www.chartingstocks.net/2008/11/top-10-economic-predictions-forecasters-for-2008/comment-page-1/#comment-79 Jing Miao Tue, 02 Dec 2008 19:54:19 +0000 http://www.chartingstocks.net/?p=245#comment-79 One thing that puzzles me is, the Fed has printed so much money and has injected so much liquidity into the economy, but why do we still see liquidity crunch? What is the mechanism behind the scene that shifts the world's worries dramatically from inflation to deflation? One thing that puzzles me is, the Fed has printed so much money and has injected so much liquidity into the economy, but why do we still see liquidity crunch? What is the mechanism behind the scene that shifts the world’s worries dramatically from inflation to deflation?

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