“Liquidity Trap” Bermuda Triangle...

Nouriel Roubini

The Deadly Dirty D-Words: “Deflation”, “Debt Deflation” and “Defaults”. And How
Central Banks Will Have to Resort to “Crazy” Policies as We Have Reached Such
Bermuda Triangle of a “Liquidity Trap”

Nouriel
Roubini Nov 21, 2008

I have been warning since January 2008 that the biggest risk ahead for the US and the global economy is one of a stag-deflation, the deadly combination of an economic
stagnation/recession and deflation. Let me discuss the details of this toxic mixture of deflation, liquidity trap, debt deflation and rising household and corporate defaults:

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INFLATION OR DEFLATION

Source: Financial Sense

"INFLATION OR DEFLATION
An Interview with Bud Conrad

- The Casey Files - by Louis James
April 8, 2008

The following interview, conducted by Louis James, a senior analyst and editor with Casey Research, appeared in the March 08’ edition of Casey’s International Speculator.

Louis James (LJ): The first question we think most readers will want to know about is this: if the U.S. is headed for recession – if not already sliding into one – do you really think we’re facing more inflation in the near future, or could falling spending power cause deflation?

Bud Conrad (BC): There are strong deflationary pressures in a credit collapse because as housing prices drop and defaults rise, some of the ability to buy new items is lost. Traditional analysis suggests that we could have deflation such as that which occurred in the Great Depression in the U.S. in the late 1920s, early 1930s. I would point out, however, that in the Great Depression the dollar was linked to gold, limiting the amount of money printing that could be done, a limitation that does not exist today. In addition, with $100 oil it is hard to argue for deflation. My base prediction is that we are heading into an inflationary period.

LJ: If there was any doubt about inflation vs. deflation, has it been settled by the central banks of the world as they responded to last summer’s credit crunch with greater liquidity?

BC: Yes. That is the point. The governments and their central banks have no limit on how much money they can create since there is no tie to gold or anything else. It is only logical to expect them to take the easy road and print money. The result is predictable. New government bailouts for whatever problems arise are going to continue.

LJ: With war spending, ballooning entitlements, a crisis of confidence in the U.S. financial system stewing, along with many other woes, do you think there’s any chance that the U.S. will not try to inflate its way out of its current economic predicaments?..."

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This guy is predicting 70pc falls...!

Asset Deflation 13: Sell Your Real Estate Immediately! (Safe Haven)

"And it's only a matter of time before that equity squeeze wreaks havoc across the economic board and takes down the stock market and commodities, too. Picture a five year old trying to beat back an elephant with a Wiffle bat -- eventually that will be the metaphor for a declining global economy trying to chase from the living room the growing, immovable force that is asset deflation.

Meanwhile, sell your real estate now. Sell it now. Now. Get rid of it. All of it. Even if you can't get 2005 prices (and you won't). Get what you can now, set the money safely aside and buy the property back (or one like it) several years from now, for a lot less money...

...I now expect every property category to become significantly affected -- houses, condos, fourplexes, apartment buildings and complexes, shopping centers, office buildings, industrial complexes, lots, land -- you name it. The evidence (and a growing and overwhelmingly negative real estate buying psychology) has me convinced that no property type will be spared..."

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