Barclays warn of coming 'Inflation Storm'

dopester

tradetime wrote: »

I could be wrong, but I don't think you'll find any evidence of a glut of house buying during any previous deflationary recessions.

Yep - the liquidation of bad debts could be severe in a deflation. Can only hope it won't be as bad as you outline - not all debt is bad or has to be liquidated. I'm basing my assumptions on the best banks surviving.

HSBC gets my vote as a safe bank (although I could be wrong having seen a lot of US stuff they are supposedly into). It's their diversity which does it for me. Whilst they lost mega-billions in USA past year or so... they still notched up mega profits overall due to operations in far-east and elsewhere (2007 and 2008). They aren't some niche player exposed to just a few specific sectors. And they were the first bank to openly signal the problems ahead, which makes me trust them more.

Maybe you are also right about house buying during any deflationary depression, because of the severe credit/lending contraction. That said there were some real examples of prime properties falling 90% in value in the Great Depression - good value for those with savings/cash.

The timidity of the banking system appears to have been general and widespread. Indeed the 1939 survey found that over half of the reasons for credit refusals by banks were "bank policy"; only a third were because of "the condition of the borrowing concern."

- Michael A. Bernstein
The Great Depression

tradetime

dopester wrote: »

Yep - the liquidation of bad debts could be severe in a deflation. Can only hope it won't be as bad as you outline

LOL, I'm with you on that one, most sincerely. I outline a glimpse of what I hope is a worst case scenario, though it doesn't even look at the implications of the collapse of stock, bond and derivatives markets, quite frankly I'd rather not consider that.

dopester wrote: »

- not all debt is bad or has to be liquidated. I'm basing my assumptions on the best banks surviving.

HSBC gets my vote as a safe bank (although I could be wrong having seen a lot of US stuff they are supposedly into). It's their diversity which does it for me. Whilst they lost mega-billions in USA past year or so... they still notched up mega profits overall due to operations in far-east and elsewhere (2007 and 2008). They aren't some niche player exposed to just a few specific sectors. And they were the first bank to openly signal the problems ahead, which makes me trust them more.

Agree with the debt comment, and if I had to name a bank it would be HSBC, followed possibly by Lloyds TSB,though I'd have to research that one a little and Citibank. but there's no certainties there, and that's the problem, and that's still only 3. depending on the interest rates they offer it may be simpler to buy government bonds.

dopester wrote: »

Maybe you are also right about house buying during any deflationary depression, because of the severe credit/lending contraction. That said there were some real examples of prime properties falling 90% in value in the Great Depression - good value for those with savings/cash.

Interesting info, thanx.
Let's hope I'm way off base, quite possible

US earnings season officially kicks off next week, that may remove any doubt of where the US, somehow I have a feeling it's going to be a rough summer.

tradetime

posh*spice wrote: »

http://www.minyanville.com/articles/GS-Bernanke-Fed-Credit-xom-economy/index/a/17804

More deflatinary doom & gloom:cool::eek:

That's a pretty good article imho, can't really disagree much with it, except the peak oil. though I do believe the inflation belief is likely a red herring that is masking deflation. The problem is that most people mistaken believe that deflation is falling prices, when in fact falling prices are merely a symptom of deflation. Once you realise that it's somewhat easier to understand from the analogy of pathology, a disease can often be present sometime before the symptoms materialise

tradetime

But why not? Acceptance of peak oil is mainstream now - look at this


http://blogs.wsj.com/environmentalca...ssimists-camp/

Do you think it's speculators?

LOL, I looked at that afterwards, and thought that likely to spark a debate on the whole peak oil thing, but couldn't be @rsed editing it.

As far as the concept of "Peak Oil" is concerned, I really don't care, there will be peak everything natural in time, it's a little planet with an ever expanding population, natural resources are not finite.

However, the current price of oil has little to do with any peak other than the fact that it is being used to justify and protect the large speculative positions built up by funds hedging against the $ decline and the failing stock markets.
To believe otherwise would be to suggest that after decades of campaigning by the peak oil crowd, the world has just woken up and thought "d@mn, they're right, oil is way too cheap" co-incidentaly occuring alongside a long term $ slide and the topping of major stock markets and the threat of recession Volumes in stock markets have been shrinking as money is funnelled into commodity funds at record rate.
By my estimation currently there is about a $40 - $60 premium on oil.

The trouble with the speculation arguement, is that those shouting the loudest accept no other contributing factor, which undermines their arguement. There is a demand / supply issue, but it doesn't justify price up here.

posh*spice

Hi

Sorry about that tradetime - when I looked at the article again I wasn't actually sure it wasn't just a blog....boy you were quick though:D:rotfl:

Anyway, who knows? There is so much speculation....speculators or peak oil???