Deflation ahead?

[CyberGuy]

They news is now talking about deflation. Instead of Raising wages due to the higher cost of living wages will be decreased due to the fact that Oil has come down in price and companies are forced to sell goods chaper to get a sale. Which is good unless you are in debt. Then you will have to pay back the loans with less money as the wages are going down instead of up. The last time this happened was the Great Depression.

[Dr. Shane]

No, we were dealing with deflation after 9/11. I was in the middle of that and ended up getting laid off by a company that didn't have enough work to keep me busy.

[Neil D]

My mother says when the economy tanks, it's called a "down turn"....When you get layed off, it's a depression....when you and your friend gets layed off, it's a devaluation....

I didn't get layed off....you experienced a depression...

:smile:

[CyberGuy]

During the 1990's recession I was laid off by the church at the end of 1995. I found another job at another Church institution doing the same kind of work. The funny thing is I was the IT person at the office that laid me off. I was the only one giving tech support for their computers. After they laid me off they realized they had made a mistake as people were asking for tech support with their computers and they had laid off their only Techie person who knew computers. They had to hire someone to do the same job I was doing before. LOL. Oh well I found another church institution who could use my knowledge with computers and valued my services.

[fccool]

The service and financial sectors will be scaled back substantially. Some people in government are already calling for a new "New Deal". I say, they can hardly afford the government they have now. In fact... they can't.

[CyberGuy]

in order to suvive I predict wages will go down ad costs of goods will go down as well. If any of you have credit card balances pay them off ASAP as it will be more and more difficult to do so with less wages. This will most likely hit us by mid 2009 or 2010.

[Dr. Shane]

I will be surprised if we go into a revised "New Deal" since the real New Deal was such a failure. FDR had a lot of control over the media of his day. There is much freer thought and expression today. We have the internet, cable and satellite TV as well as talk radio. No one is getting re-elected if the economy continues to tank and unemployment rises above 10%.

Private industry creates jobs. All government jobs need to get money from private industry in order to pay the government workers. So the government cannot create prosperity. The private sector must boom in order for jobs to grow. The government can prevent the economy from booming but cannot cause it to boom.

Uncontrolled debt has gotten us into this mess. Companies as well as individuals have over extended themselves. So we are going through a correction. What we don't know is how long it is going to take. If it is too long, a lot of us will likely lose our jobs. Those in the health care industry should be safer than the rest of us. My industry, construction, is very vulnerable.

[melvin mccarty]

Uncontrolled debt is a problem of course but uncontrolled speculation on the stock exchanges led to a huge bubble that has now burst. (Some people still call it investing?) ...mel

[CyberGuy]

Uncontrolled debt is a problem of course but uncontrolled speculation on the stock exchanges led to a huge bubble that has now burst. (Some people still call it investing?) ...mel

Citicorp is now in trouble but not due to the fact of lack of capital. Citicorp in fact is flush with cash with over 100 billion in cash. But its stocks have plummited 60 percent in the past week due to speculation from investors that the large amount of debt will cause Citicorp to fold. There is now talk of a merger with some other bank to steady the decline in value of stock. There are fears the feds may step in and take over Citicorp if the drop continues. Yes Speculation is causing Citicorp to fall not the fact it has no capital.

http://www.msnbc.msn.com/id/27839633/

[Dr. Shane]

Unless this is actually the real beginning of end time events, the market will recover. We don't know how long it will take. If a person has any extra money, now isn't a bad time to buy some stocks in solid companies if a person is willing to sit on them for ten to twenty years.

[Neil D]

So, Shane, how's your oil stocks right now? I don't want to know about others or the general condition of stocks...I want to know about yours....

[fccool]

Unless this is actually the real beginning of end time events, the market will recover. We don't know how long it will take. If a person has any extra money, now isn't a bad time to buy some stocks in solid companies if a person is willing to sit on them for ten to twenty years.

I wouldn't buy any stocks unless you see the early signs of improvement. The recession is still in the early stages, and now is not the best time to tie up your money in speculative financial assets. Sit this one out. If you do invest... I'd invest in commodities. Certain commodities transcend the inflationary and deflationary trends.

I feel really bad for retired people right now. They are being hit really hard with all of this.

[melvin mccarty]

Don't feel bad for this old retiree. A solid guaranteed 4.5% interest rate wont make me rich but I wont be losing sleep over the stock market which is not and never has been a true indicator of value...mel

[Dr. Shane]

So, Shane, how's your oil stocks right now? I don't want to know about others or the general condition of stocks...I want to know about yours....

Exxon Mobil is the only company I own that is actually up. Of course, I am less than 1% up on that company so my overall portfolio is down 26%.

Anyone getting 4.5% return on their money is doing pretty good in this economy.

[CyberGuy]

Unless this is actually the real beginning of end time events, the market will recover. We don't know how long it will take. If a person has any extra money, now isn't a bad time to buy some stocks in solid companies if a person is willing to sit on them for ten to twenty years.

Ten to 20 years is it. You are conservative. I have heard the stocks should recover in five years. Recession could last two years before we hit bottom and then will rise back up. I think if that is true maybe seven to eight years.

I will be retired by twenty years. I Sincerly hope it will not take that long to make a profit. We will go through three or four more recessions by then. We seem to go through one every 5 years or so.

[melvin mccarty]

Anyone wanting to gamble on the stock market should go for the sure thing. Become a broker then you can make it whether coming or going. For everyone winning on the stock market someone else must lose unless you can guarantee an inflation that lasts forever. ...mel

[phkrause]

I heard that T-bills are the way to go.

pk

[Dr. Shane]

Investing in the stock market is the same as investing in a business. Let's pretend I am a mechanic so I buy tools, rent a garage and buy some advertising. That is investing. It is investing in my company. If my company is successful than my investment will pay off. If my company fails than I lose my investment.

The same holds true for investing in the stock market. When I buy stocks I am investing in a company. If the company is successful my investment will pay off. If the company fails I will lose my investment.

[melvin mccarty]

The theory is good but recent events have shown that speculators can and do cause market swings that have absolutely no bearing on whether or not the company is sucessful.....mel

[Dr. Shane]

Yes, they cause "swings". Over the long haul good companies do good. So the stock market is not a good place for someone looking to make a quick dollar. However a young person with 20 to 30 years of investing in front of them should consider the stock market.

[CyberGuy]

Yes, they cause "swings". Over the long haul good companies do good. So the stock market is not a good place for someone looking to make a quick dollar. However a young person with 20 to 30 years of investing in front of them should consider the stock market.

The question remains when should a person sell off his or her stocks and invest in T bills. 10 years from retirement? 5 Years from retirement? Problem is those that are a couple of years from retirement will lose a lot.