1.
Houses must stop going down in value.
The smart money won't buy when prices are declining.
Some will, but the majority won't until they see prices stabilize, then start to go up.
House prices won't stop falling while unemployment is rising.
Many will refi, but most will use the savings to pay off other debt or save.
2.
Unemployment needs to stablize.
Obama's jobs programs won't take effect until 2010 at the earliest.
It takes time to plan roads and bridges and then to actually do the work.
Where is the job growth coming from in the meantime? I don't know.
3.
Just like OPEC, the G-20 is supposedly united to fight this battle.
Watch, just like OPEC members cheat by pumping more oil when they've agreed not to, some G-20 members will devalue their currency to increase their exports (maybe China, Japan, maybe us, who knows?) Once one does, others will follow suit to regain their share of the shrinking markets.
4.
The consumer has to want to spend.
Already the savings rate last month started to increase in this country.
I am just as guilty as the next so far as living by the "have it now, pay for it later" mentality, but no longer.
The shift has begun and will only increase in intensity.
It is being helped along by the banksters yanking credit lines and raising credit card fees to encourage people to pay off debt.
As more people become fearful of losing their jobs, they will save more.
5.
The Fed can and is doing everything possible to unlock the credit markets, but they can't make an unwilling consumer spend.
They will have a difficult time getting corporations to spend on CapEx if they are worried about falling profit margins.
This is the deflation mentality that already has taken hold.
The Fed may have some early successes, housing and cars sales may spike, but then go back down.
The Fed ultimately is pushing on a string.
If nothing else, 2009 will be interesting to see who wins.
Benny or the Deflation Dragon.
Houses must stop going down in value.
The smart money won't buy when prices are declining.
Some will, but the majority won't until they see prices stabilize, then start to go up.
House prices won't stop falling while unemployment is rising.
Many will refi, but most will use the savings to pay off other debt or save.
2.
Unemployment needs to stablize.
Obama's jobs programs won't take effect until 2010 at the earliest.
It takes time to plan roads and bridges and then to actually do the work.
Where is the job growth coming from in the meantime? I don't know.
3.
Just like OPEC, the G-20 is supposedly united to fight this battle.
Watch, just like OPEC members cheat by pumping more oil when they've agreed not to, some G-20 members will devalue their currency to increase their exports (maybe China, Japan, maybe us, who knows?) Once one does, others will follow suit to regain their share of the shrinking markets.
4.
The consumer has to want to spend.
Already the savings rate last month started to increase in this country.
I am just as guilty as the next so far as living by the "have it now, pay for it later" mentality, but no longer.
The shift has begun and will only increase in intensity.
It is being helped along by the banksters yanking credit lines and raising credit card fees to encourage people to pay off debt.
As more people become fearful of losing their jobs, they will save more.
5.
The Fed can and is doing everything possible to unlock the credit markets, but they can't make an unwilling consumer spend.
They will have a difficult time getting corporations to spend on CapEx if they are worried about falling profit margins.
This is the deflation mentality that already has taken hold.
The Fed may have some early successes, housing and cars sales may spike, but then go back down.
The Fed ultimately is pushing on a string.
If nothing else, 2009 will be interesting to see who wins.
Benny or the Deflation Dragon.
Source...