the Road to Perdition

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investorzzo's picture
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Joined: Nov 7 2008
Posts: 1182
the Road to Perdition

Pure truth, like pure gold, has been found unfit for circulation because men have discovered that it is far more convenient to adulterate the truth than to refine themselves." - Charles Caleb Colton

There is so much going on out there that it's difficult to pick a starting point. China, Ireland, quantitative easing and even Greece pop in and out of the news like a cork bobbing around on rough seas. One day everybody is selling everything due to deflationary fears and the very next day they are buying everything because of the threat of inflation. Then the next day deflation back on the tip of everybody's tongue… The press is neurotically trying to attribute every minor fluctuation in share price to something that just happened somewhere, and it is annoying to say the least. If you know anything about the markets, you know that 99% of the time they are reacting to something that will occur five or six months out into the future. Of course if the folks on Bloomberg had to make some intelligent comments on what could possibly be coming six months down the road, the air waves would be filled with a lot of silence.

The financial news networks' devoted most of the week debating whether or not the Irish will agree to a bailout and as of the close of business on Friday no decision had been reached. The Irish want the money but without the pain, and why not. We had a whole decade of free money with little or no regard as to whether it was being used for productive purposes. The EU wants the Irish to take the money along with all the Draconian strings attached to it, and the Irish are balking. Meanwhile the Greeks took money but failed to implement all the changes they had previously agreed to. Then we have the Portuguese, Spanish and Italians all heading down the same road and they are watching carefully to see just how bad it will be. I would love to have a ringside seat when the EU tries to implement change in Italy. I've lived in Italy for a number of years and change is about as welcome as a blow to the head from a baseball bat!

Then we have the curious case of China. They are concerned about inflation and rightly so. The Chinese spend a much larger percentage of their income on food and clothing than westerners do and the prices of corn, wheat, soybeans, sugar and cotton have jumped considerably over the last six months, and that tends to create unrest among the lower classes. The Chinese have raised reserve requirements on five separate occasions with the last announcement on Friday, and they are implementing price controls. Price controls carry with them the seeds of their own failure as anyone from Latin America or the Nixon Administration can tell you. The following chart gives you a very good idea of the inflationary pressures facing countries like Brazil, India and China.  chart:


idoctor's picture
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Joined: Oct 4 2008
Posts: 1731
Re: the Road to Perdition

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