Janet Tavakoli a Deflationist, yes its true !

[icm63]

http://maxkeiser.com/2009/10/03/ote2...anet-tavakoli/

- Money printing NOT working
- Falling prices killing income
- GDP adjusted for deflation is -2.1%
- Consumer debt load the error of inflationists

Has Itulip got it wrong, has the slow kill of the delfation process fooled Itulips thinking ....

Hey you gotta listen to the dark side !

I am just reporting whats out there !

[LargoWinch]

Re: Janet Tavakoli a Deflationist, yes its true !

Has Itulip got it wrong, has the slow kill of the delfation process fooled Itulips thinking ....

icm63, lets imagine for a second that deflation is reality, then how can iTulip be wrong provided EJ's cash recommendation?

Ka...Poom!

And yes Poom is coming.

The more people think deflation is coming (except for my fellow iTulipers), the happier I am as I can buy their assets on the cheap. ;)

[pianodoctor]

Re: Janet Tavakoli a Deflationist, yes its true !

I queried EJ on Tavakoli's position recently and he gave a nice reply. You might want to review this thread: http://www.itulip.com/forums/showthread.php?t=11883

[Mega]

Re: Janet Tavakoli a Deflationist, yes its true !

Some of us are not allowed to entre.............Cut & Paste?
Mike

[pianodoctor]

Re: Janet Tavakoli a Deflationist, yes its true !

I don't know why a "Select" member would not be able to view it (if they are signed in), but any "Select" member could goto the "Ask EJ" Forum and view the thread "Tavakoli sez "Deflationary Collapse. iTulip Opinion?" and be able to read it.

Certainly it's not my place to copy a "Select" thread over so non-Select visitors can read it.

[Spartacus]

Re: Janet Tavakoli a Deflationist, yes its true !

The FED has not let the printed money off bank balance sheets (yet)

When they are forced to force the banks to lend, the inflation will be horrific.

See the latest Steve Keen posts on ANZAC housing prices.

http://maxkeiser.com/2009/10/03/ote2...anet-tavakoli/

- Money printing NOT working
- Falling prices killing income
- GDP adjusted for deflation is -2.1%
- Consumer debt load the error of inflationists

Has Itulip got it wrong, has the slow kill of the delfation process fooled Itulips thinking ....

Hey you gotta listen to the dark side !

I am just reporting whats out there !

[kartius919]

Re: Janet Tavakoli a Deflationist, yes its true !

Bernanke to Ms. Tavakoli: "Baby girl, I have not yet begun to print!"

[raja]

Re: Janet Tavakoli a Deflationist, yes its true !

http://maxkeiser.com/2009/10/03/ote2...anet-tavakoli/

- Money printing NOT working
- Falling prices killing income
- GDP adjusted for deflation is -2.1%
- Consumer debt load the error of inflationists

Has Itulip got it wrong, has the slow kill of the delfation process fooled Itulips thinking ....

Hey you gotta listen to the dark side !

I am just reporting whats out there !

She posted this Comment following the interview:

You probably noticed that in Chapter 12 of Dear Mr. Buffett I said we would have painful stagflation by now. I predicted inflation would be an enormous problem. I believe this will eventually occur, but I was wrong about how quickly we would be at risk for inflation.
We are still feeling the effects of a collapsing asset bubble. For the reasons I mention in the interview, I believe we are still at risk for further deflation. I explain the Ponzi scheme that inflated the debt bubble here: http://www.tavakolistructuredfinance.com/Fraud.pdf It was not limited to mortgage loans, but I use them as an example, because most people can relate to it.
Due to the opacity of banks’ balance sheets, I may be wrong again about the timing of deflation followed by inflation. The effects of our massive money printing could result in inflation much sooner than I think. But my current analysis of the scope of the bad loan problem suggests that we will are at much greater risk for further deflation, before inflation kicks in. I may revise that opinion if I get better information, and of course, this is just my fact-based opinion, and due to imperfect data, my analysis may be proven incorrect.
I won’t leave further comments at this time, but over the coming months there will be more developments. Before the end of the year, the issue of fraud, the regulatory failures, and the current lack of indictments will get much more public attention.

[gorkypark]

Re: Janet Tavakoli a Deflationist, yes its true !

http://maxkeiser.com/2009/10/03/ote2...anet-tavakoli/

- Money printing NOT working
- Falling prices killing income
- GDP adjusted for deflation is -2.1%
- Consumer debt load the error of inflationists

Has Itulip got it wrong, has the slow kill of the delfation process fooled Itulips thinking ....

Hey you gotta listen to the dark side !

I am just reporting whats out there !

Another macroeconomic analysis that is divorced from geopolitical considerations. The debt could be deflated if they weren't accelerating new debt issuance - this will end with a currency crisis.

[FRED]

Re: Janet Tavakoli a Deflationist, yes its true !

Bernanke to Ms. Tavakoli: "Baby girl, I have not yet begun to print!"

Deflationists remain focused on one major cause of inflation but ignore the others.

If inflation came only from excess money and credit through the banking system, then none of these events could ever have occurred. They cannot comprehend the sudden impact of a sovereign debt and currency crisis, whether induced by the government on purpose, as in the case of the U.S. in 1933, or by global debt and currency markets as has occurred repeatedly to net debtors throughout history once they fiscal deficit to output ratio surpasses a threshold.

U.S. government policy induced Ka-Poom 1933
Macro Conditions: GDP had since 1930 declined 25%
unemployment: 24%
M3 money supply: off 40%
Banking system: barely functioning
Ka-Poom: 15% deflation to 15% inflation
on 70% dollar devaluation


Argentina's 1st Ka-Poom: 1989


Argentina's 2nd Ka-Poom: 2001


Russia Ka-Poom: 1999

We are not in control. This is not 1980.

We are as Russia in 1987, Argentina in 1989 and 2000, with a weak economy, large external debts, and exploding deficits.


We cannot have a stag-deflation like Japan's since 1995.

Japan ran a large current account surplus.

The U.S. runs a current account deficits.

If the U.S. cannot continue to export financial "goods" then how will it finance it's current account?

The U.S. does not have to print a single dollar to cause a huge spike of inflation. All it has to do is convince foreign creditors that the U.S. cannot repay its debts in strong dollars. Without the support of foreign central banks, they will cause through collective action of withdrawing funds the very event they each fear separately. A Ka-Poom is a run on the bank, where the "bank" is U.S. foreign funds held in U.S. accounts. So far foreign central banks have prevented a run on this bank. Will they do so forever? Is an accident possible?

[pianodoctor]

Re: Janet Tavakoli a Deflationist, yes its true !

She posted this Comment following the interview:

You probably noticed that in Chapter 12 of Dear Mr. Buffett I said we would have painful stagflation by now. I predicted inflation would be an enormous problem. I believe this will eventually occur, but I was wrong about how quickly we would be at risk for inflation.
We are still feeling the effects of a collapsing asset bubble. For the reasons I mention in the interview, I believe we are still at risk for further deflation. I explain the Ponzi scheme that inflated the debt bubble here: http://www.tavakolistructuredfinance.com/Fraud.pdf It was not limited to mortgage loans, but I use them as an example, because most people can relate to it.
Due to the opacity of banks’ balance sheets, I may be wrong again about the timing of deflation followed by inflation. The effects of our massive money printing could result in inflation much sooner than I think. But my current analysis of the scope of the bad loan problem suggests that we will are at much greater risk for further deflation, before inflation kicks in. I may revise that opinion if I get better information, and of course, this is just my fact-based opinion, and due to imperfect data, my analysis may be proven incorrect.
I won’t leave further comments at this time, but over the coming months there will be more developments. Before the end of the year, the issue of fraud, the regulatory failures, and the current lack of indictments will get much more public attention.

So maybe she's not so much the deflationist as a Kaaaaaaaaa-POOMist?

[goadam1]

Re: Janet Tavakoli a Deflationist, yes its true !

Deflationists remain focused on one major cause of inflation but ignore the others.

If inflation came only from excess money and credit through the banking system, then none of these events could ever have occurred. They cannot comprehend the sudden impact of a sovereign debt and currency crisis, whether induced by the government on purpose, as in the case of the U.S. in 1933, or by global debt and currency markets as has occurred repeatedly to net debtors throughout history once they fiscal deficit to output ratio surpasses a threshold.

U.S. government policy induced Ka-Poom 1933
Macro Conditions: GDP had since 1930 declined 25%
unemployment: 24%
M3 money supply: off 40%
Banking system: barely functioning
Ka-Poom: 15% deflation to 15% inflation
on 70% dollar devaluation


Argentina's 1st Ka-Poom: 1989


Argentina's 2nd Ka-Poom: 2001


Russia Ka-Poom: 1999

We are not in control. This is not 1980.

We are as Russia in 1987, Argentina in 1989 and 2000, with a weak economy, large external debts, and exploding deficits.


We cannot have a stag-deflation like Japan's since 1995.

Japan ran a large current account surplus.

The U.S. runs a current account deficits.

If the U.S. cannot continue to export financial "goods" then how will it finance it's current account?

The U.S. does not have to print a single dollar to cause a huge spike of inflation. All it has to do is convince foreign creditors that the U.S. cannot repay its debts in strong dollars. Without the support of foreign central banks, they will cause through collective action of withdrawing funds the very event they each fear separately. A Ka-Poom is a run on the bank, where the "bank" is U.S. foreign funds held in U.S. accounts. So far foreign central banks have prevented a run on this bank. Will they do so forever? Is an accident possible?

The U.S. isn't nearly Russia after the wall came down or Argentina. Is the world really ready for America to pull out militarily across the globe yet? I don't think so.

Why not a managed decline? Bretton-plaza something. SDR replacing the dollar in trade but not letting the U.S. collapse?

[FRED]

Re: Janet Tavakoli a Deflationist, yes its true !

The U.S. isn't nearly Russia after the wall came down or Argentina. Is the world really ready for America to pull out militarily across the globe yet? I don't think so.

Why not a managed decline? Bretton-plaza something. SDR replacing the dollar in trade but not letting the U.S. collapse?

We have argued a managed decline (dollar ratchet) is the plan but execution errors and accidents are possible.

[GRG55]

Re: Janet Tavakoli a Deflationist, yes its true !

The U.S. isn't nearly Russia after the wall came down or Argentina. Is the world really ready for America to pull out militarily across the globe yet? I don't think so.

Why not a managed decline? Bretton-plaza something. SDR replacing the dollar in trade but not letting the U.S. collapse?

Russia used to be seen as the other [military] "superpower"...until it was unable to continue funding so many foreign adventures [ironically its foray into Afghanistan, that dragged on for 9 years, may have been the turning point for political opinion in Russia].

The "one superpower" world since 1989 does not appear to have turned out quite so well. The peace-dividend is but a distant memory. And there are an increasing number of nations that no longer view an American military presence with such fondness - Japan among them. The vested interests that got the USA into Iraq would love to see it stay, but the majority no longer support the occupation...if they ever did. Other than Karzai and his cronies do you think the average Afghan really wants western military powers in the country? South Korea will follow Japan's lead and over time will persuade China to participate in an active, cooperative Asian military role to ensure stability in that region. Everyone can see that the USA's ability to control and influence North Korea or Burma is diminishing rapidly. What's the point of having large US troop contingents in Okinawa, or nearly 100 US military bases in South Korea, or for that matter nearly 800 military bases worldwide, when many of them have long ago lost their strategic significance for both the USA and host country alike, and are no longer effective geopolitical assets? Does anybody really think the USA is going to fight a land war in Asia even though it maintains 28,000 troops in South Korea and another 50,000 in Japan?

The USA does not need "to pull out militarily across the globe". Nor will it.

But it can, and probably will, gradually withdraw from numerous locations and nations that increasingly see their existing form of relationship with the USA [economic, financial, military and political] as more of a liability and, like Japan, are tiring of funding it. Here's one recent announcement that is part of a pattern that has accelerated since the Obama Administration came to office:

US to remove soldiers from Okinawa
Tue, 17 Feb 2009 08:25:18 GMT

The US and Japan sign an accord ordering the relocation of 8,000 US soldiers from the Japanese island of Okinawa to Guam by 2014...

...Under the agreement, Japan will provide $6.09 billion of the estimated $10.3 billion cost for the transfer of US soldiers and for the building of housing and other infrastructure on the Pacific island of Guam -- a US territory...

...The people of Japan have protested for years about crimes perpetrated by US military personnel stationed on Japanese islands, including Okinawa.

Public anger has increased because of several incidents in recent years, including the alleged rape of a 14-year-old girl by a US Marine on Okinawa...

...the governors of 14 of Japan's 47 prefectures that host US Marines recently asked the Japanese government to start the process of assessing the SOFA [Status of Forces Agreement], which was last revised in 1960.

In other instances, such as much of Central Asia, the dictatorial rulers of these states [the 'stans] are once again realigning themselves with Russia, partly because its in their kleptocratic interests and partly because none of them see the USA as a reliable partner. For example, Kazakh President Nursultan Nazarbayev initially pursued a very careful and successful "non-aligned" balancing act between Russia, China and the USA. US-based Chevron was one of the first petroleum companies allowed into post-Soviet Kazakhstan and was able to cherry-pick their preferred asset in the Caspian. However, the non-aligned strategy has shifted dramatically in the past year as Nazarbayev increasingly strengthens his ties to Russia as the means to counter fears of too much future Chinese influence in Kazakh affairs...once again because he does not see the USA being a reliable partner in that regard.

Here's another example:

US agrees deal for Kyrgyz airbase

Page last updated at 11:39 GMT, Tuesday, 23 June 2009 12:39 UK

Kyrgyz authorities had ordered the Americans to leave the Manas base, but now say that it can be used - but only for the transit of non-combat supplies.

The base, near Kyrgyz capital Bishkek, has been used to ferry troops to Afghanistan and refuel military planes...

...Its closure would have come as a major blow to the US operations in Afghanistan, amid plans for an intense campaign against the Taliban...

...The US agreed to increase its annual rent payments from less than $20m (£12m) to $60m (£37m) as part of the deal, Foreign Minister Kadyrbek Sarbaev told the committee.

The agreement comes four months after the Central Asian nation ordered the eviction of US troops. However, it falls short of US hopes of maintaining the base as a fully fledged military facility...

[c1ue]

Re: Janet Tavakoli a Deflationist, yes its true !

The U.S. isn't nearly Russia after the wall came down or Argentina. Is the world really ready for America to pull out militarily across the globe yet? I don't think so.

Why not a managed decline? Bretton-plaza something. SDR replacing the dollar in trade but not letting the U.S. collapse?

The point I've stressed several times is that the world wants stability and is willing to work with the US on it.

But the world will not accept the US unilaterally defining how the exit plan works to the US' own interests.

The Obama administration's behavior thus far has been far from accommodating to ROW interests; the ongoing massive spending is a sign that the US would rather risk systemic dollar collapse than cooperate on an exit plan. The accompanying massive military efforts in Iraq and Afghanistan show similarly poor end gamesmanship.

To me it is crystal clear that Obama and gang are gambling that the ROW would rather not risk a disorderly collapse in the dollar and the US economy; from my point of view it is not clear that this is a high percentage bet.

The political sea change in Japan, the recent China military brandishments, the ongoing Iran thumbing of noses, and the ongoing lack of wins in Iraq and Afghanistan do not bode well.

Even South America is making noises.