By wonderful coincidence, following the 1st Law post that I put up on October 30, the Los Angeles Times ran the following story on October 31, on the main page of their Internet edition,
Investors brace for a case of deflation
By TOM PETRUNO Read entire article here.
then the New York Times ran this story on November 1, on the main page of their Internet edition
Fear of Deflation Lurks as Global Demand Drops
By Peter S. Goodman Read entire article here.
Until recently Old Media (print and broadcast - pre Internet - Items 15 & 16 Front Page) have been more than reluctant to report directly on the huge Deflationary effects of the crash of the Housing Bubble and the Collapse of World Financial Markets.
The LATimes speaks of the "possiblity of deflation."
The NYTimes says, "a new threat may be gathering force within the American economy... deflation ... a term that gives economists chills."
These articles are talking about the "possibility" of an extended slow down and decrease of prices of goods and services in addition to the massive deflation of Housing Values, Stocks and Commodities. Part of the fear of Deflation is that once started, it can be even more difficult than Inflation to cure, and the loss of sales and jobs could then push the Economy deep into a Major Depression.
How much more needs to happen before we can accept that Trillions of Dollars have already evaporated in the U.S. alone when we look at only Housing, Stocks and Commodities and that this is already a major Deflationary trend.
The 1st Law says that the downward pressure on prices will continue. We cannot expect prices to hold steady with almost 80,000 foreclosures reported in the last 3 month period in Southern California alone.
If you haven't already done so, read both articles - they're both eye openers.
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