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Wednesday, 11 March 2009

US GDP Decline

A revised reading on fourth-quarter gross domestic product was its worst in 26 years. All I can say is "WOW".

I know it’s an annualized figure, but folks we talking trouble here. Don’t think that just because it’s not happening to us that we are safe. Japan's GDP, the worlds 2nd biggest economy, slumped over 12% annualized. Make no mistake, we WILL receive what’s coming to us, it’s entering our shores this very moment. You can see the effect on some of our listed companies, F&P, PGG Wrightson and Nuplex all falling more than 30% in their share price in the last 2 weeks over worries about everything from debt to product demand. This is a cycle we will have to endure, I don’t think there is anything we can do about it or even that we can 'soften' it with any kind of significance. Remember that cash is king, and never more king that now. Good luck! This could last a generation.


Anonymous said...

Cash is indeed king, until the hyper-inflation kicks in.
Then you had better have your money tied to an asset, be it gold, shares or property.

Rusty Kane said...

Having physical Gold and Silver not bonds and property that is freehold and fully paid for 5 to 10 years ago. Other than that its a lottery. Some may win but most will loose. Paper Money is only King if it is measured against something of real ever lasting tangible value. Printing more without it only curates inflation.

We can all be paper money millionaires in Zimbabwe. But were not King we are hungry.

Steve Baron said...

But there also needs to be the "correct" amount of money available to buy the goods and services produced. At present we allow the banking system to create this money and put it into the system at a cost (interest). What they effectively do is produce counterfeit money. If the local plumber created money like this we would send him to jail. So why do we allow the banking system to do this? They do not own the money supply of New Zealand, we do. It should be the responsibility of a non political organisation (but responsible to parliament) to introduce the amount of money needed. Not too much and not too little. But introducing it as a cost to society places an extra burden which isn't needed and which must inevitably cause inflation.