depression

We will have to wait to see who is right, markets invariably overshoot and then bounce so may be you could have it on the nail but for now I will stick with my figure as being a time at which to consider starting to buy.

Well, I'm hanging in there for now, but I agree that it could be another bubble.

What gave even me butterflies in my stomach though was this:

Looks like we're definitely in a debt-deflation. The Fannie and Freddie thing is confirming data.

Folks here (including one lass whose name I've forgotten, Jane something?) used to ask me how we'd get deflation when the central banks could print money. I'd opined that we'd get inflation, and then when the printing tactic failed, deflation.

It looks like I may not have gotten things quite right. We seem to be heading into a scenario in which we get debt-deflation driving down the price of assets bought with credit, while we have inflation in commodities and other assets bought with cash. It's a strange and potentially devastating scenario. The UK central bank has the dilemma "You can save the housing markets or the economy: choose one" while the US central bank can pick one of the economy, housing or the Dollar.

Meanwhile on anglo-saxon countries look like they're facing potentially out of control inflation. They'll be forced to hike rates. That could badly hurt western currencies if they choose to fight the debt-deflation by cutting their rates.

The long and the short of it is that our central banks don't have any easy answers and may well be forced into doing the wrong thing. That looks a lot like the situation of the Fed at the start of the 1930's.

I do think that what the central banks do right now will decide whether the world will get a depression instead of a recession. I don't know what they should do.

I've almost certainly been more bearish than most of you for the past eight years, and certainly the news right now looks pretty much like any of my posts from 2000-2007, particularly the Freddie and Fannie situation.

What I'm telling you though is that the speed of this is scaring me. I have a gnawing feeling in my gut that I'm going to prove to have been far too optimistic.

FoFP

When I went to Russia back in '79 one of the things that struck me was the fact that they have so much gold they can afford to put it on the rooves of their minarets or in the mouths of old crone street-sweepers. Like diamonds, the gold price seems to be supported by an artificial shortage.

They seem to be losing Fannie and Freddie again today. Has the Plunge Protection Team finally discovered its limits?

FoFP

In message , M Holmes writes

It is a little like trying to stop the tide coming in and yet they still seem to think that they can do it. They may do so for a while but if it keeps on coming the result is inevitable.

What about oil ?

In the Telegraph article someone referred to it as taking the same place as gold during the 1930s.

Until recently I'd viewed investing in exploration and production (E&P) oil companies as high risk, but several of them have got good cashflow/assets from proven fields and/or cash in the bank from selling successful fields and they are valued at or below net asset value (NAV). The valuations often use oil at $70/barrel. Soco International (SIA) 30% below NAV and Aminex (AEX) at NAV seem to be the clearest value.