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Deflation or Inflation


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#1 wndysrf

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Posted 10 November 2003 - 03:27 PM

Not much to report today.

All eyes are on Crude Oil.

Where is it going? Up or Down?

Higher prices mean economic recovery?

Or will lower prices stimulate an economic recovery?

Hypertiger's take:

"A significantly lower oil price might at the margin encourage a company to borrow some money and invest in something."

Debt inflation is where you use previously created debt which is current income as leverage to request a bank to produce out of thin air new debt or future income in greater quantities than the previously created debt...

Which produces more debt inflation...

300 million people which have to borrow $30 to buy a barrel of oil?

or

300 million people which have to borrow $20 to buy a barrel of oil?

Which scenario has a better chance of supporting a six figure income for the average Information technology professional?

When a state of the Art 1 GHz processor in 2000 cost $1140

or

When a state of the Art 3 GHz processor in 2003 costs $315

or

When a state of the Art 2.5 GHz processor in 2003 costs $188

As prices rise consumers are basically "forced" to borrow more...Debt Inflation

As prices drop consumers are basically "forced" to borrow less...Debt Deflation

Since current income is previously created debt and if new debt creation which is future income is less than current income then when future income shows up as current income it will have to be less...

The top sucks from the bottom so the current income of the top is dependant on the debt inflation of the bottom to be maintained...

Currently the top has recieved 3 tax cuts in 3 years a massive chop in the wholesale cost of short term debt (Federal funds rate dropped from 6.5% to 1%) the net result is that there is not enough debt inflation to support the employment of 400,000+ people a week... they have either been eliminated or are being recycled into lower pay structures....

All the "Bush boom" has accomplished is maintain the lifestyles of the rich and famous...so far... The Tops ability to borrow more short term debt at wholesale and mark it up for sale to the bottom has been maintained but the key problem is that the bottom has a finite ability to purchase it at retail long term...especially when they are being cut off from employment and count on the retail cost of debt (Interest/mortgage rates) to keep dropping forever to survive...

It is like hypothermia where blood supply is cut off at the extremities to support the heart and brain...

Currently we are about to slip into Unconsciousness... just before that the "Delirious" victims usually feel very warm...


.......................................

Small cap or no cap stocks are on the move.

Here's one that's interesting.

VerticalNet

The CEO of this dot-bomb has the same name as me.

A stock that did a reverse split, and still went to $1.

Yet Riverboaters and Gamers are still toying with it.

Note how it traded at $1,500 post reverse split at the height of the mania.

Today, its up 30% from $1.14 to $1.53.

I guess its "a bargain".

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#2 wndysrf

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Posted 10 November 2003 - 03:29 PM

Shorter term view.

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#3 Hiding Bear

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Posted 10 November 2003 - 04:40 PM

Hypertiger's take:

[i]"A significantly lower oil price might at the margin encourage a company to borrow some money and invest in something."

Debt inflation is where you use previously created debt which is current income as leverage to request a bank to produce out of thin air new debt or future income in greater quantities than the previously created debt...

Which produces more debt inflation...

The sucking sound you hear is the credit bubble machine changing gears.

It was thought that the credit bubble machine had no reverse, because it has never went into reverse very long in the "post-war" period. It might still kick out of reverse with a special high-octane mixture of repos. But right now, all those new mortgages and new credit cards are not producing new money which ends up in bank, savings, and money market fund accounts. In fact the money supply is dropping for two months or so now.

Less money means banks can not buy the endless new issues of government bonds, which means higher interest rates.

The market has been rising the last two months by fighting the incoming tide. Congradulations to those who saw that, stuck with it, and profited. It could even go higher temporarily as the money supply runs down further, but that incoming wave looks higher and higher...

#4 DrStool

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Posted 10 November 2003 - 05:06 PM

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#5 DrStool

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Posted 10 November 2003 - 05:09 PM

Bullstool.com now open, for bulls and anyone who wants to bash good ole Doc.

Don't do it here. And don't attack your fellow stoolies here, regardless of persuasion. Repeat violateors will be booted. Moderators are instructed to immediately delete personal attacks and notify admin of the offender.

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#6 Guest_jrmfl_*

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Posted 10 November 2003 - 05:11 PM

no matter how you dice, england's going to have a new queen.

hardly bullish.

#7 DrStool

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Posted 10 November 2003 - 05:17 PM

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#8 BarBu

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Posted 10 November 2003 - 05:18 PM

don't attack your fellow stoolies here, regardless of persuasion. Repeat violateors will be booted. Moderators are instructed to immediately delete personal attacks and notify admin of the offender.

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Posted 10 November 2003 - 05:24 PM

1045/ 1044 are major resistance levels so closed my short. We are very Dover Sole on the 25min bar chart I use on all indices. HOWEVER, this will be negated to a full short again at 1043 due to a major (short term) trendline break - standing order placed already!

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Posted 10 November 2003 - 05:26 PM

I sold my SPXJan.1075 bought at 37, at 44 right before close.
Only holding an SPXJan1050 at this point. The rest in cash. I hope to do about 8 more ladders into the 1050 on the next spike.

#11

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Posted 10 November 2003 - 05:30 PM

Well, the Stoolville Angst-O-Meter seems to have nailed the top over to weekend. JP Morgan confirmed it this morning with their upgrade of INTC and the networking and equipment sectors, all of which were promptly pimp-slapped. With the bond market closed tomorrow, things should get damned interesting. With a little 300 point Nikme drop over night, a low volume sell-off works for me tomorrow...followed by a high volume sell-off on Wednesday...and then we're closing-in on margin call time for the bullies...

No Mo Fo Mo Mo.

Check out the action today on CFC, AMAT, SINA, SNDK, FRNT, and the nice pop on SIL. I think the action on CFC and AMAT just about sums up the market picture for now.

It was a great trading day in my little corner of the world. Now everybody play nice tonight, or Doc will give you a tittie twister.

Best - Plunger

#12 Howl

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Posted 10 November 2003 - 05:31 PM

It looks like the dutch may get some deflation in 2004. Thanks again to AssHold. :grin: In order to get customers back, they lowered more than just the price of their shares. Dutch supermarkets are involved in a full scale price war.

Of course, AssHold gets most of its money from that strong, vibrant and ever-growing economy in the USA.

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#13 FeedFool

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Posted 10 November 2003 - 05:32 PM

I donít think bears are out of the woods yet. Wave 5 should complete tomorrow unless I am missing something? Has any one got a better count?



>>>>>>>>>>>>>>Click Here<<<<<<<<<<<<

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Posted 10 November 2003 - 05:34 PM

It looks like the dutch may get some deflation in 2004. Thanks again to AssHold. :grin: In order to get customers back, they lowered more than just the price of their shares. Dutch supermarkets are involved in a full scale price war.

Of course, AssHold gets most of its money from that strong, vibrant and ever-growing economy in the USA.

Ahold?

Does this have anything to do with the Royal Family?

#15 BartTheBear

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Posted 10 November 2003 - 05:34 PM

1045/ 1044 are major resistance levels so closed my short. We are very overbought on the 25min bar chart I use on all indices. HOWEVER, this will be negated to a full short again at 1043 due to a major (short term) trendline break - standing order placed already!

What time frame are you using?

I'm seeing pretty ding-dang O/sold on the major indicies using shorter time frames.





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