In Case of Emergency, Break Glass

lper100km

To think "outside the box", you have to first realise you are actually in a box.

Gerben

I can think of some more glass.

Impose trade barriers to stimulate domestic production.
Not a wise thing to do. I don't think they tried it recently.

Subsidize local sectors that can help replace imports.
This is what they do with the corn ethanol and biodiesel. Might have been counter productive as it raised inflation.

evilgenius

You guys are the ones that need to think outside the box, the US box. When this shitstorm expands to all the world's markets like it has here, and they go down far harder, there will be untold money flooding into the US to take advantage of what will be perceived as sale prices and security. What is happening today with gold (down $60 just this am) is an example of the mechanism. Stay diversified, don't put all of your money into precious metals, don't put all of your money into one kind of stock. Be brave and buy a financial stock when the names that will survive become apparent. Food is always good. If you aren't the kind to use ammo, maybe you can trade it?
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"Hope encourages men to take risks; men in a strong position may follow her without ruin, if not without loss. But when they stake all that they have to the last coin (for she is a spendthrift), she reveals her real self in the hour of failure."

patience · Expert Joined: Jan 04, 2008 Posts: 1521

evilgenius,
I think you are right, but I'm afraid that the notable future bargains are going to be stuff I don't want. Like McMansions, SUV's, and piles of unnecessary electronics. The practical stuff that I want will still be high, due to demand, like garden stuff, fuel, food, steel for my business, and electrical power to keep the lights on.
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Local fix-it guy..

BigTex

I can't believe that there haven't been more suggestions concerning additional panes of glass that can be broken.

If we have done about all that can be done at the government and central bank level, and it's not near enough, where does that leave us?

It's not good. I see no propellant to move the stock market higher, but I see many things that could pull it lower.

It's like we have finally, finally, finally, finally, finally, finally,......................................................................
FINALLY reached the end of the debt game, when there is no other credit line to tap, no more resource to exploit rapidly, no more currency games to play, no more nations to attack, and no more tax cuts to give. When the best investment is to day trade hoping you can sneak in and sneak out without getting hurt.

Maybe it's just time to live on a pay as you go basis, and do the best we can to survive the trainwreck as ALL of the leverage un-winds at every level of society.
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MrBill · Expert Joined: Sep 15, 2005 Posts: 5398 Location: Eurasia

The dirty little secret is that we always did and always will live in the here and now. Borrowing from the future in any sense is always an uncertain bet.

Thinking outside the box? You mean like this?

Tanada

patience · Expert Joined: Jan 04, 2008 Posts: 1521

The govt can take on mortgage debt directly, at a BIG haircut on the principal, but that won't bring solvency to the IB's. Roubini says we're headed for the "mother of all meldowns", and all the govt could do is to intervene to make it orderly, not being able to stop it.

Ticker Forum, Roubini

Worth a read. He's seems to have been right so far.
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Local fix-it guy..

BigTex

My greatest hope is that in 18 months or so we will all be sitting around feeling dumb for ringing the doom bell and we will be telling JohnDenver what a clever fellow he is.

THIS JUST FEELS SPOOKY.

I'm looking at what has unfolded in the last few months and I realize that people haven't gotten REALLY rattled yet. Every time the stock market looks poised for a BIG drop (20-30%), another emergency lever gets pulled and disaster is averted.

There hasn't been that large scale stampede for the exits, and yet it seems almost inevitable that it will occur, since there just aren't ANY fundamentals that seem to form the basis for intermediate to long term optimism, chief among them the fact that the days of really cheap oil are over and the computer/internet/mobile phone market has reached the saturation point. Thus, no leading industry and no tailwind of cheap energy to look forward to when people start feeling better about things.

The one question about which I can't believe no one seems to have any clarity is whether we are looking at long term INFLATION or DEFLATION. The case for both is pretty strong.

As one of my professors used to say:

BIG PROBLEMS, _{small brains}
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MrBill · Expert Joined: Sep 15, 2005 Posts: 5398 Location: Eurasia

Just because someone says something is broken does not mean they know how to fix it! Many of Roubini's solutions between punishing investors; rescuing homeowners; breaking loan covenents; and nationalizing banks all would cause many foreseeable and unforeseeable consequences.

Read Ayn Rand's Atlas Shrugged and note the passages that talk about railways lobbying to have their bonds placed in a repayment moratorium, while politically connected investors find a way to get their bonds unblocked. I witnessed the meltdown in the wake of the Russian crisis and do not think that is mere fiction.

Someone would pay for those losses and bailouts. Instead of those holding those assets now most likely the taxpayer through currency devaluation; higher real interest rates; higher taxes; and lower living standards.

It takes moral courage to say, "you made your bed, now lie in it." We have been reaching for the proverbial painkillers a little too often lately, and it is starting to become an addiction we cannot afford and one that is certainly not good for us.

Besides Roubini has called 6 out of the last 3 recessions. It does not make him wrong this time, but it does not mean his insights are more clairvoyant either. Even a broken clock can be right twice per day! ; - )
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The organized state is a wonderful invention whereby everyone can live at someone else's expense.

patience · Expert Joined: Jan 04, 2008 Posts: 1521

BigTex,
I don't think it's possible to call the inflation-deflation thing yet with perfect certainty, because the govt is the wild card. The run to commodities was sorta predictable, and the current drop there, as a combination of supply/demand issues and flight to safety Short term Treasuries saw a flight to safety, too, but nobody wants to lend LONG now.

We are going to see long term deflation from collapsing credit (reduction of money supply) as the credit markets continue to implode and virtual money disappears. What happens to the value of the US dollar is too complex for me. In the near term, the money supply contraction can make fewer dollars worth more, but what govts and Central Banks world wide do to combat that contraction remains to be seen.

I have asked for advice everywhere, as to how to prep for the future, and there are no crystal balls, it seems. So, I've relied on common sense for what that's worth. Went to cash some time ago to avoid bank collapse losses, and spent on things we can personally use, like lots of food, household stuff, and materials and supplies for our repair business. The business is counter-cyclical to the degree that anyone has ANY money left.
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Local fix-it guy..

BigTex

MrBill · Expert Joined: Sep 15, 2005 Posts: 5398 Location: Eurasia

When would-be Presidential candidates start talking about windfall profit taxes on oil cos. and drawing down the SPR in response to high fuel prices then my confidence in them to fix ANY problem in the real economy - much less one as complicated as this credit crisis surrounding the housing slump - is next to zero.

anagami

yesplease · Fission Joined: Oct 03, 2006 Posts: 2316