The ideal situation is to drive down its costs through deflation, while printing money to pay for it. This isn’t magic, the printer is essentially confescating the wealth of other dollar debtors. Small debtors have no choice but to go along and potentially go under, such as home owners. Similarly small creditors will go under due to cash flow.

Large creditors benefit, by being able to turn their potentially worthless dollar IOU’s into real assets or productive investments at significantly lower costs. They may see some short term balance/income sheet pain, but these will be paper losses that may even have tax benefits.

The bubbles were driven not by currency creation but credit creation. Additional credit creation is no longer possible, as debtors are at their carrying limit. Many were at that limit even without high energy costs or more expensive imports. They were living on borrowed time via defering interest (negative amort) and borrowing to pay interest (pay primary mortgage with heloc). The federal gov and state/municipal govs have been doing the same thing on a larger scale.

Besides no longer being an option for reflation,real credit expansion is no longer in best interest of primary debtor (US gov). Which by the way also controls interest rates and “printing press”.

The plus side of all this, is hopefully the cash will be recycled by credits into productive investments which create real growth and living standards for everyone. I am cautiously optimistic this will be case, as investors will be shy of credit based products and thus limit over consumption and speculation. Likewise over consumers and speculators won’t be able to make payments on their leverage, even if someone is willing to lend them the money. Especially when facing margin calls, rather than equity gains to be cashed out.

Now the happy ending of growing out of this through productive use of cashflows from monetization of deflated assets depends on sustainable energy.

Basically China needs to funnel cash from t-bonds into green energy investments in US rather than buying more CDS. China will have to write down these CDS, but should be able to get a higher rate of return on real investment as underlying costs should now be lower. The land for the plant. The salaries for workers giving the lower cost of housing and consumer goods/services.

Who pays for this all, primarily the highly leveraged US service worker and the financials. Dependent equities will also take a short term pounding on nominal terms, but real value of dividend yields will be more.

A bartender will no longer be able to live in a luxury condo via option-arm and lease a pre-owned BMW.

Police and other public sector unions will have to take wage and benefit cuts, even if it means towns going bankrupt. No more patrolmen making 80-100k + overtime in NJ. Pensions become 401Ks.

Investment banks will see regression to mean profitability, and bonus compensation. Managing directors at bulge brackets will make 300k instead of $4M. Prop traders at these banks will make 250-400k instead of 500k to $20M.

So, today, my husband tells me McKeeDee’s down the street has wireless.

WTF? So, I’m fast & free online right in the living room. Can you believe that? Right in front of my face.

Has anything major happened over the last five days?

from what i have been seeing lately i wouldnt be surprised if oil drops back under 100 between now and spring (march or so). But sdont get to excited bi the only way i see oil dropping to 60 or even 50 is if TSHTF and we enter a depression ( deflationary or inflationary is irrelevant). At that point however the low price of oil is besides the point; because you cant east it. If on the other hand we are still chugging away next summer i expect to see another 150+ runup in oil prices that may not be so temperary.

It appears that currency issues and psychology have temperarily wonout over supply realities.

Hey SAS world bank at work????

s: I just walked past the location of that mailbox in Princeton today…..

agorafinancial.com 5 minutes for 7/30
Addison Wiggin and Ian Matthew

“Future distribution deals largely hinge on the success of the special event on 8/21. There will likely be DVD distribution in the future, but if you don’t blow the dust off your wallet and show up on the 21st…..who knows?”

“We admit it is less than a bargain, but for $5 – 10 more than you’d spend to see The Dark Knight, you can experience a one-of-a-kind event…our very best effort to wake the U.S. from its fiscal coma…..”

“In fact, Addison just informed me that if you can show proof of purchase to the event, he’ll spring for a free year of our flagship publication, Strategic Investment.”

He goes on to post the customer service web site – You can check there for more info I would guess.

that has to be the most exspensive movie ticket.

if its $18 for a movie?….I wonder what the cover is at the local strip club? I bet its damn near $100.

:)
SAS

“Or maybe you mean that they stole the Korean ideas, filed similar patents in the US and are now licensing the technology (with IP rights) back to Korean firms”

bingo, but both ideas & tech.

SAS

NBA has no talent.
just young loud mouths.

give me Larry Bird, Magic, Jordan, or Pistol Pete anyday.

SAS

He is singlehandedly the most responsible for the Mets not making the post-season last year and he is at it again this year! Wagner might be terrible, but he is a god compared to this Zambrano reincarnate.

“A person close to LeBron James said Tuesday that the Cavaliers’ superstar would strongly consider playing overseas if he was offered a salary of “around $50 million a year.”
James’ current contract expires after the 2009-10 season, and while several NBA teams are working to create salary cap space for his impending free agency, none could offer a contract beginning at even $20 million a year.
The Russian team CSKA Moscow and the Greek team Olympiacos, which recently gave Josh Childress a contract approaching $30 million over three years, have already contacted James, according to the person close to him. The person added, however, that no monetary or contractual discussions have taken place.”

ok, that for the correction.
no matter who said, this type of talk gives me the red a*s.

SAS