Quote from: The_JMiner on August 10, 2011, 01:12:52 AM

Quote from: cypherdoc on August 09, 2011, 11:29:48 PM

the 10 yr UST is down to where we were in 12/08. it screams deflation. who you gonna believe?

Yes, except you forget in 2008 the credit markets were frozen and people were not sure if the banks had the capital (paper) to cover their losses and deposits. This time around we KNOW they have the capital and so do many corporations that made 25%+ profits this past few years and that these huge mountains of money are sitting there untouched. The second that money is released into the economy (my prediction is it will chase commodities) inflation is going to ram us hardcore. We already got a taste of it early this year when there were "signs of a recovery" these companies started just barely opening the tap and inflation was on everyones radar ( a reason gold is at the price its at imo).

they don't have the capital to cover all the bad debt on their books. billions of bad residential and now commercial RE sit marked to model, ie, fictitious valuations. why do u think FASB was forced by threat of Congress to relax the rules? if they were forced to mark to market you'd hear a detonation the likes of a nuclear bomb. look at the charts of the financials. it tells the whole story. BAC is going to be the next Lehman. their exposure to European sovereign debt is significant altho not as large the the French or German banks.

all that cash in excess reserves and in corps balance sheet is stockpiling for the next crisis. the banks refuse to lend b/c the consumer is in terrible shape and a huge risk. no wage inflation here boys and thus consumption is gonna slump big time. only a few large corps have signif cash stores like Apple but this is far from the typical case. have you looked at the small biz survey from NFIB? heres a quote from the President:

"Given the current political climate, the protracted debate over how to handle the nations debt and spending, and the now this latest development of the debt downgrade, expectations for growth are low and uncertainty is great," said NFIB Chief Economist Bill Dunkelberg. "At the two year anniversary of the expansion, the Index is only 3.4 points higher than it was in July 2009. And considering the confidence-draining performance of policy makers, there is little hope that Washington will stop hemorrhaging money and put spending back on a sustainable course. Perhaps we might begin referring to the 'Small-Business Pessimism Index' from now on."

http://www.scribd.com/doc/61924141/Small-Business-Optimism-August-2011

small biz is what drives employment and innovation in this country. its in the TANK. the large corps with cash piles are few and far btwn such as Apple. why do they refuse to invest? b/c they're bracing for the storm. its here right now. this next downturn will sweep all inflation assets under the rug for the next decade.