metal roof panel manufacturers Inflation Through Deflation
In July, oil prices soared to $147 a barrel in 2008.Food prices were flying over the roof,China's economy is overheating,The population of underdeveloped emerging economies is on the verge of uprising,American consumers are angry about paying $4.50 gallons of gas,Every time oil prices hit new highs, stocks are falling,In addition to inflation, the biggest concern for every economic policy maker is inflation.My my my,How quickly things change.Who will dunk?Oil will fall to its lowest level at $32 a barrel,The Dow Jones index fell to 6000,Copper is below $1.50 a pound;The entire capital market structure seems to be on the verge of collapse.It's not just a terrible moment for investors.But for anyone with a bank accountI remember talking to my friends and family.Wondering if their 401 K nest eggs are safe.IRA's,Hold shares, even in their savings accounts.Panic and fear have ruled the world for months.And then through some action by the Federal Reserve.US treasury,Signs for revising market accounting rules,And a $850 billion stimulus bill.VIOLA,Confidence is "restored ".Improved bank balance sheets,The toxic assets held by the bank suddenly disappeared (Magic mark through accounting to the market,Artificial stimulus is provided through American recovery and investment laws.Unprecedented global government spending is rampant,0% interest rate for banks,And $1.4 trillion of QE was enacted from the Federal Reserve by buying mortgage bonds and US Treasury bonds.The Dow rose from 6443 to 11,205.The CNBC stock cheerleaders claim that a firm, "recovery" is in place and we can expect a V-shaped recovery.It never meant anything to me.I told my clients that there won't be a V-shaped recovery and I highly recommend them not to be fooled by the hype.Put all that said a grain of salt, just remember who they are, and their function is in their professional life.The reason I told my client that there won't be any shape or form similar to V-shape recovery is that we have too many structural headwinds happening.1.In the housing market, the number of foreclosures continues to rise, and the president's federal foreclosure plan has so far been a huge failure,According to the director of financial assistanceNeil Barofsky,Who said the plan did not "leave a clear dent in the foreclosure application ".Elizabeth, Warren.Who chaired a separate congressional oversight group on bailout,He said the failure of the Treasury to act faster would certainly hurt the economic recovery.A problem that used to be just subprime mortgages has recently evolved into alt a and major mortgages,Cause a deeper dilemma.Now, $8000.The tax credit program expires on April,In the last two reports back home, our home sales figures were the worst.No recovery in the housing market,People are not confident because they see their own highest value assets deteriorating in many cases,Thus limiting their normal consumption habits.Former U.S.Fed chairman,Alan GreenspanRecent warnings that falling house prices could undermine the United States.S.Recovery and trigger double-dip recession.2.Credit,This is the lifeline of many enterprises.Nowhere to find.In my view, this is not a problem of insufficient liquidity, but rather a problem of borrowers who lack credit value and aggregate demand for domestic goods and services,If you put these together with all the toxic debts that banks still hold, their balance sheets are stuck,This is what you get;There was a serious lack of credit.Until the labor market has improved significantly, commercial and residential properties are safer,Banks don't lend at all.period.3.A damaged labor market.Many of the jobs lost during this downturn are in building and manufacturing bases, and many of them will not come back for a long time.The overhang of residential and commercial properties is enormous;The demand for goods was crushed.This, in turn, destroyed the work of manufacturing.Even now,With a slight improvement in the prospects of manufacturers (Mainly due to the growth of emerging economies,Work is still not provided,This is related to spending on technology and equipment and software.Like John, Redding.The chief economist of RDQ Economics said,"You can understand that businesses don't have to pay for medical devices and software,These get better tax treatment than you get recruiters.If you can get rid of the upgrade and delayed hiring of capital expenditures for a period of time,This means economic significance.Especially in this uncertain policy environment."From our economic growth is just not fast enough to raise the unemployment rate meaningfully,Even the chairman of the Presidential Council of Economic Advisers,Says Christine Romer"We need 2.The 5% increase is only to maintain unemployment.If you want to let it goYou need to grow stronger than that.That's what I 've been talking about for the last few quarters.That's why I 've always wanted us to just sit on the floor of Congress through work measures.4.State and local budgets look terrible.No more than 500 of federal aid.By 2011, 000 jobs will be eliminated.In this political atmosphereWill to continue spending and rescuing state and local governments,A lot less other people just don't have there.It looks like they will go through a very painful deleveraging process of their own.5.Uncertainty for businesses and small businesses, due to tax increases and heavy regulations from health care laws and Wall Street reforms.There is a reason why the company is sitting at $1.8 trillion and why small businesses do not recruit, and if it is not difficult enough, the people that these entities employ because it is,Government policies and companies they constantly need to demonize and their profits are making it harder for them to do so.Crew of PiccoWho is the largest bond trader in the world?And the smartest economic minds of home,When they created the new normal in 2009,This is defined as slow global growth (More in G-3. Emerging Markets,Higher unemployment ratemore de-leveraging,More regulationAnd weaker America.S.$ In the future 3-5 years.I remember just last year, Larry Summers, the president's chief economic adviser, disagreed with Picco's assessment of the period when our economy entered a "new normal.It looks like Sir now.Summers is dead!El Erian,People who create a new normalCompare consumer perceptions of the United States.S.Economy to three-The stage rocket ship tried to escape the pull of the Earth's gravity.The first phase is government spending.The second is reduced inventory and consumer demand.Summers "has the concept of escape speed," El-Elia said October.2009 at the financial conference-Market professionals are in Toronto."We don't have enough ability to reach the speed of escape.6.The 800 pound gorilla in the room is our national debt risk.See what happens when little old Greece has problems;Then it looks like the entire EU is going to collapse.People are talking about the euro not surviving.I can remind you that even if things seem to be under control again,This situation is far from over.This will come again, because all they do is buy some time, and all these countries are now starting a very painful deleveraging process, through austerity measures to cut their budgets,pensions,Jobs and welfare will affect growth prospects across the eurozone, which means their ability to pay off their debts will be reduced.Considering that 30% of all our exports go to Europe,Their economy will undoubtedly slow down significantly,This will directly affect our exports.One day,Like Bond alert (bond holders)Hold these southern European economies accountable for their reckless spending spree;If we do not act in time, they will undoubtedly be angry with us.Who is confident here that Congress or our president can do it in order that it needs our fiscal house?Not me.I really believe that many of us are elected leaders.Or for this question, many of us,Know the consequences of this risk.Let's take it like this;Basically like a campaign in a bank.Except that it is running in the United States.Interest rates will soar,It will punish consumers.corporations,Small businesses,The dollar will plummet,Global confidence will collapse,Moreover, a new round of systemic risk will shut down the capital market, thus affecting every securitization investment in the world.One of the few investments that will gain value will be gold,It is most likely to soar 3,4,5 times its value in a short period of time.The focus of the foregoing is not to emphasize the risk of sovereign default or the fear of such a situation,But more importantly, let you know about our economic situation and the challenges we face.The latest GDP growth figures for the second quarter show that our economy has slowed for three consecutive quarters.PIMCO's chief,Bill Gross (By the way, my favorite economistThe government is trying to maintain deficit spending at artificial consumption levels, "compared to washing money away from economic toilets."He went on to say,Deficit spending will not be successful because under the new normal,deleveraging,re-Regulations and de-The structural headwinds of globalization have led to a slowdown in growth-than-Average return on investment."As I pointed out,The problem with our labor market is structural.The idea of spending to fill the gap doesn't work.I want you to use the stimulus strategy as a bridge.On one side of the bridge is pre-The recession on the other side is recovery.The idea is to build the bridge long enough to guide us to recover.The problem is that the distance between the two is much farther than that of most economists,More importantlyWhite House,Unexpectedly,And we have no resources ($$)Build a Bridge long enough for us to go from one side to the other.The stimulus money is now disappearing and disappearing,State and local government jobs will fire thousands of workers.There is a good chance that our GDP growth will be around 1% in the next 2 quarters-1.In 5% of the region, it is most likely that the real unemployment rate will be higher.So what will the government or the Fed do to make the economy move in the right direction in a meaningful way?Congress and the White House spent almost all of their political capital and did not have the will to push for another stimulus bill,It would be very limited if they did,I'm sure it's going to be doomed to fail, just because they just don't understand, there's no quick fix, they try to avoid this kind of downturn being sick-conceived.So left the Fed.The Fed has taken huge steps to reduce the Fed's funding rate to 0% --.25%,with $1.By buying mortgage bonds and US Treasury bonds, 4 trillion of the quantitative easing;Basically print money to buy our own debt with the aim of providing more liquidity and lower mortgage rates for the capital markets.Regarding its effectiveness,This can be debated,For both sides.It reduces interest rates and provides liquidity,But it did not increase the loan in an obvious way,And those people,It's all.That's what I believe the Fed will do.I believe it will happen sometime in the second half of this year.The options are:1.Buy more assets.The Fed can buy more mortgages-Supporting Securities,Or because the MBS it holds are so big,It can buy more long-Long-term Treasury bonds.Even James Brad.A member of the Federal Reserve Board voting and perennial inflation hawksRecently wrote an article to support the idea if conditions continue to deteriorate.2.Deepen the promise of keeping interest rates low for a long time.The Fed may reiterate its commitment to provide additional guarantees or rock-and-roll-Even if the recovery starts to take off, the bottom interest rate will drop.3.Stop paying interest on excess reserves.The Fed may try to stimulate more loans by lowering the interest rates it pays to banks.25%.4.Open up a new loan facility.The Fed may open or continue to open up lending mechanisms to increase the supply of credit it wants to help in economic areas such as commercial real estate.5.Stop shrinking its huge balance sheet.It would be a more subtle approach than to continue with more asset purchases.6.The Fed may change its inflation target from 2% to 4%.All these strategies pose heavy inflation risks,But fear of deflation is greater than fear of inflation.When the Fed announced their $1.4 trillion purchases of mortgages and government bonds,The dollar depreciated by 11%, gold prices rose by 25% over the six-month period and silver by 55%.Considering that we are now entering the strongest period of precious metals this year, we expect the dollar to be hit by these actions,We strongly recommend our customers to increase their precious metal holdings.I really don't understand how these actions will help stimulate bank lending;As mentioned earlier, the problem is not liquidity or interest rates,The banking sector is confident in lending.The risk of expanding the Fed's balance sheet is enormous.The size of the Fed's balance sheet has exploded;It was never as big as it is today.Every time the central bank's money supply has expanded a lot,Inflation always follows.Now, the whisper on the street is that the Fed can expand its balance sheet by another $1 trillion.The money supply created can sit there for quite some time,Potential price inflation.If the bank does not borrow money,Then it doesn't matter how much money is created,There will be little inflation.To let inflation come,Money for printing must flow into the real economy.However,The more money banks hold,There are more potential inflation impacts and risks.The psychology of consumers and banks will suddenly change.And the currency, "Speed", can be released into the economy at an alarming rate.Seize policy makers,Inflation is allowed to stay.Make things worse.We see this happening in the next few years.The unemployment rate is high,Most likely about 7-8%,1-with GDP growth-2% area.This will be a very bad economic development called stagflation,This can be defined as low growth and high inflation.In this case, there will not be much investment other than precious metals.Investors should protect themselves by diversifying.Precious metals should be part of your investment strategy.Once again,I thank you for taking the time to read this newsletter;I hope it helps.