Liquidating Everyting That Has Cash Value

Mandar Nimkar reports in India's Economic Times:

"Last week was the nastiest in past two decades for the global stock and commodity markets. Gold--considered a safe haven--also tumbled amid the global credit

uncertainty."

"On Saturday, gold tumbled to $859 from its high of $936.30 in July, as investors sold the yellow metal to cover losses in equity markets. Silver plunged 11 per cent. Commodity prices tumbled more than 5 per cent. Government bonds, too, were not spared."

"Reuters/Jefferies CRB Index of 19 raw materials plunged 10 per cent since Oct 6, crude oil futures fell as much as 9.3 per cent to $77 in a single day and copper slumped 14 per cent since Jan 2006."

"The falling stocks and commodities prices signal deflationary pressure as the world is going for asset liquidation to raise cash. Deflation is defined as 'a contraction of economic activity resulting in a decline in prices."

“It's a very sombre picture as there is a panic all over the world. Every one knows that we are going into a deflationary recession. People are so scared that they are looking to liquidate everything that has a cash value,” said Bhushan Triwedi, VP-Strategies, Globe One Advisory."

“On the daily charts, double bearish and shoulder has formed, neckline breakout of which gives a target of 9000 on Sensex and 2900 on Nifty. However, daily RSI is in short term oversold zone, which hints at some relief rally in coming days,” said V Bhalerao, analyst at Flexion Capital."


Chinese Vice-Minister Urges Stability:

"The international community should strengthen cooperation to maintain global economic stability, a senior Chinese financial official said on Sunday."

"Li Yong, vice-minister of finance, also urged developed countries to adopt responsible policies for world macro stability."

"The international community should jointly strive for world economic stability," he said in a statement at the 78th Development Committee of the World Bank and the International Monetary Fund."

"Major developed countries should maintain the stability of the value of international reserve currencies and ease global inflationary pressures, Li said."

"The international community should also be vigilant against possible deflation caused by a slowdown of the global economy, he added."

Dr. Housing Bubble writes on the Bailout

"Make no mistake, the government loves inflation. This is the only way we are going to get out of our $10+ trillion national debt. The worst mega nightmare that is the political economist boogeyman is deflation. Why? Well if you think about it, inflation makes the most sense from the government stand point. If we have steady inflation, that $10 trillion starts to look smaller and smaller as time goes by. If we hit deflation, then we have a fixed amount of debt that we are paying off with weaker amounts of funds."

"So even though the government is publicly saying they are trying to control inflation they are silently screaming about the prospect of deflation. Why do you think they did not hesitate to inject the world with trillions in funds which by its nature is inflationary? They don’t care. All they care about is avoiding deflation which will crack the credit markets."

"If you weren’t paying attention because of all the background noise, the CPI actually went negative for the first time in August since October of 2006. So if inflation was their true concern, the market has already corrected that. Lower fuel costs, dropping commodities, and lower home prices. Yet just look at their actions. This is not what they want."

"The bailout in this regard almost assures some inflationary reactions. So there will be an impact here. A few months ago Americans were screaming about high energy prices. Well, energy has gotten a whole lot cheaper but it also means you won’t have much access to credit. That decision wasn’t taken too well."