Jason Rines (iThinkBig)

Deflation: The 800-Lb. Gorilla in the Room

1) As I am in the Consumer Healthcare space I can see there are products/services no longer offered under Medicare in 2009. I imagine each year there will be less and less until it's life saving drugs and surgeries covered and nothing else (as it really should be). Fraud runs rampant to the tune of $30 B a year between Medicaid and Medicare. Come to think of it, all the major sectors with government involvement are prone to massive fraud and corruption. Let's start right there in cutting costs. Point #4 is probably the reality, however in tackling this problem.

2) The market will shed the broker/middleman market whom was overpaid while the producers saw weak profits. Someone else had a great post I read last night about 'headquarterization' model on Naked Capatalism that describes the U.S. and UK outsourcing/service model brilliantly. The U.S. will become a producer once again - if you think that is going to happen tomorrow, good luck.

3) I am not a big Obama fan but out of all the options tax cuts are the best option combined with fiscal stimulus to smaller business/entrepenuars. So I agree with the general direction of the Obama economic team, somewhat pleasantly surprised. Cautious optimism you could call it. As you mention Mr. Picerno, there are no perfect options at this point.

4) The current crop of corporate and government are still largely in place. Emerging leadership with less to work with in the future will be making some of the tougher choices. 3-4 years is the historical norm of leadership/labor migrations. That puts us into the 2012/2013 years before we see sustainable Bull market although there are many more technical indicators which also speak into this time frame of next Bull as well.

5) Will some of the reinflation work? Yes but who knows the side effects? Probably sky high commodity prices in energy and subsequent trickle down. That would makes sense consider government heavily taxes the energy market. Will it be the Japanese version, Weirmar lite? I don't think any of us can really even take an educated guess without seen the fiscal stimulus package first. End of Q1 between earnings and this package should be most telling. I do think this will be a strange shaped W with the 1st leg down complete, see a reinflation stage, smaller shedding of excesses in 2011/2012 and slow recovery. But plenty of opportunity for the astute.