RiskAverseAlert

Three Asset Classes that Can Actually Outpace Coming Inflationary Price Increases

Any worse than double-digit inflation to come is likely only in a process of breakdown of the global physical economy. Financial assets surely will deflate; the hyper-inflation of monetary aggregates in response to the "credit crisis" virtually assures this. View the wall of money as a war chest. No Fed tightening will change the outcome this wall portends. Financial asset deflation was begun when the sub-prime mortgage market imploded, and it will not stop until cooler minds are given opportunity to act on the fact that, the present financial system is bankrupt, must be put through reorganization, and reestablished in an environment whose sound structural framework already has historic precedent (think the Bank of the United States).

Until policy drastically changes and calls a bankrupt duck "fupped duck," increasing segments of physical production will cease to exist because finance to support physical economic processes will not be forthcoming in those measures needed to sustain present capacity. We already see this effect in so many places you would have to be practically blind, deaf and dumb not to acknowledge what, really, is going on.

Thus, given our present direction, it is by scarcity that hyperinflation will be felt by most.

Tuesday Outlook: Commodities, Global Markets

"Is the recent downturn in volume because Goldman’s computers were shut down for fear they were compromised?"

No. Volume is turning down because pigs really do get slaughtered. When, in fact, equity is dead money, what do the masses who got caught last year like a deer in the headlights do? THEY HOLD! Fantasizing that the status quo of the past couple decades will somehow soon return, weak hands hold, hoping to recover from last year's whipping. It is not gonna happen. Wall Street's credit bubble has popped. The best that can happen from here is that, the lender of last resort is able to control the bloodletting. Uncle Sam certainly CANNOT inflate the credit bubble with such vigor and reckless abandon as Wall Street before. This ALONE is critical to a return of the status quo of the past couple decades. And it is not gonna happen. Indeed, it CANNOT. Yet still weak hands hold, hoping for recovery.

Commodities, Global Markets

Equity is DEAD MONEY. Stocks don't need volume to decline. They can fall of their own weight. And with a mountain of debt needing servicing ... and the physical economic capacity for doing so collapsing ... fall of their own weight they will.

The stock market is nowhere even close to bottom. Yet to sweep over the lower Manhattan casino is ... capitulation. This is the big picture in a nutshell.

Returning to Thursday's throttling ... the best those holders of bloated, over-priced inventory could do was cease offering their shares for sale. No one was buying. A disaster in waiting is all this revealed. It may take some days/weeks for truth to sink in. Yet when it does, we're likely to see an avalanche rushing toward the exits...