- Biderman is correct: ‘deflating asset prices and inflating commodity prices’! As the economy collapses, unemployment will rise. The number of people who can afford assets like homes will drop. Thus, demand will drop. Banks will be dis-inclined to lend money to home buyers as there is too much uncertainty. Job security will not be there. Thus, assets that need financing ie. borrowing from banks will tend to drop in price. However, basic commodities like food, gas, oil … will rise in price as people cannot live without them. There will be a flight to stock up more on food as the currency collapses.
Biderman On Biflation And ‘After The Endgame’!
by Tyler Durden, www.zerohedge.com
“What happens when the Bernanke Put dies?” is the salient question that Charles Biderman of TrimTabs asks and answers in today’s effusive excursion into a market that will face both deflation and inflation. In response to the question of what happens after the current miasma of markets ends, Biderman opines that assets will deflate – once the Bernank’s constant handing over of trillions to bankers is done, equity and bond prices will deflate and commodity prices will inflate. Nominal USD-priced commodities will soar against a deflating currency as asset prices for everything else will deflate.
Concerned, just as we have been, that outbreaks of violence will occur in Europe as their ‘safety net’ unravels, Charles adds that while the US faces turmoil, Europe will get their ahead of us as “their entire welfare-state-based economies will need a do-over”. He does offer a silver-lining for the post-modern world with some thoughts on the productivity boom (and not just leverage) that an online world will bring and while he believes US housing has bottomed for the lowest 2/3rds of the population, he remains extremely cautious on equity prices and their inevitable crash.