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"TOKYO (Reuters) -- Sony Corp. posted a loss for the fourth consecutive quarter, hit by sluggish cellphone sales and as it cut prices of its PlayStation 3 game gear, but trimmed its full-year loss forecast close to market expectations.
Sony's mobile phone joint venture with Sweden's Ericsson saw its sales tumble and losses balloon as it has lacked a strong smartphone offering to rival Apple Inc.'s (AAPL, Fortune 500) iPhone and Research in Motion's (RIM) Blackberry." (which are also cheaper than a cup of Starbucks coffee)
So that's not Deflation, then what is your definition?
What is wrong with not WANTING OR NEEDING to buy crap? Can someone please tell me what is wrong with deflation? I like the fact that my dollars will buy more, even if I don't NEED what it is they can buy for less. As for houses falling in price, what is wrong with that? Don't people NEED houses? Why must houses be expensive? We need food, and yet we don't like it when that costs more; we need gasoline for our cars, and we're always whining about how expensive it is (it still seems cheap to me, but then again, I don't drive much). If a nation cannot or will not live within its means, then it gets what it deserves, and from where I sit, this whole deflation thing is a nonstarter.
Tenounce, deflation is the loss of pricing power throughout the economy. Usually happens after a credit bubble as people tighten their belts, buying fewer and fewer goods and services. Firms then lay off people and reduce production, but then there is even less buying, and then firms cut markups down to the bone from the factory to the truck to the warehouse to the point of sale… everybody hoards cash… no spending… no jobs. Company is making so little per product sold at all levels they can barely afford to service their obligations (if at all).
You rip those lines off the front news page today and yet talk about it, like it's another era.
Computers falling in price has to do with technological innovation and the increased economy of scale in production costs that comes when manufacturers are increasing supply. It’s not deflation.
My dear Thunderlips, we didnt scale production, far from it. Silicon Valley did all it could to keep prices high to rack in revenue and keep industries going given there were few players and sky high demand for information products, we certainly had incredible profits and huge demand for labor/skilled labor. Once the Japanese figured on their own to create microprocessors, harddrives, mother boards, mainframes and minis... that was it for our pricing power. The Europeans were not far behind them. You can be as 'innovative' as you like but you still have inherit deflation in tech products.
As such Japan/Taiwan/Korean entered the US markets and dropped prices forcing us to exit markets and/or ship jobs creating plenty of deflation.
Look up the last point on Japans deflation on Wiki:
http://en.wikipedia.org/wiki/Deflation#Major_deflations
"Imported deflation: Japan imports Chinese and other countries' inexpensive consumable goods, raw materials (due to lower wages and fast growth in those countries). Thus, prices of imported products are decreasing. Domestic producers must match these prices in order to remain competitive. This decreases prices for many things in the economy, and thus is deflationary."
Not even Moor's law foresaw deflation. In fact "technological innovation" requires considerable amount of new capital and retooling which is expensive. As such to keep up with innovation requires cheaper labor and materials because pricing pressure still remains. We haven't had price inflation goods/services in decades.
"If that was the case, then cars are really deflated. A $360 Model A Ford is about $20k in modern dollars. For less than $20k, you can buy a Camry today. The former does not come with power windows, 10-CD changer, airbags, seatbelts, interior heating, etc. etc."
And yet, Detroit's mistake was to increase costs in labor in face of competition with lower prices from Japan.
High Tech product SV produced also had high labor costs, but they have pay limits with limitless layoffs/restructuring over the past decades.
Can you compare pre-war Toyota car prices to Toyota today without add on features?
My dear Thunderlips, we didnt scale production, far from it. Silicon Valley did all it could to keep prices high to rack in revenue and keep industries going given there were few players and sky high demand for information products, we certainly had incredible profits and huge demand for labor/skilled labor.
My dear Thomas-- Of course you scaled production. Regardless of what you can sell your product for, you still want to produce for as little as possible. So you can reap the "incredible profits" that you mention.
@nomograph
“But waitâ€, you cry. “Investments are risky!†Well, life is risky and there are no guarantees. There will always be winners and losers. Try not to be a loser.
“But waitâ€, you cry. “I read on Patrick.net that America is toast and that there will be rioting and the economy will never recover, so I’m putting all my savings into gold!†Congratulations, you are well on your way to being a loser.
I agree, however, we can all take steps to reduce our personal risk. Now is the time to reduce debt, increase savings for when those opportunities arise if your not already in a position to do so.
I'm gonna take a loan against my home and invest in real estate. Real estate ALWAYS goes up.
I agree, however, we can all take steps to reduce our personal risk. Now is the time to reduce debt, increase savings for when those opportunities arise if your not already in a position to do so.
+1
More so than since shortly after the Depression, will there have ever been a greater opportunity for "Two Mules and Goat" stories. I think with in the next year and onward for a few years, those that managed to save. Will be in an extraordinary position to find cheap niche opportunities in almost every Brick and Mortar business, as well as other private investment opportunities, that will make the fantasy Real Estate market look like a suckers bet.
The trick is going to be, having a Mule and Goat to start with. Because the banks aren't going to be in the business of actually loaning money anymore. They will just have schemes and complex financial investment vehicles that allows banks to prosper and grow, on the ebb and flow of the myriad of Zombie banks siphoning off profits through losses.
"Regardless of what you can sell your product for, you still want to produce for as little as possible. So you can reap the “incredible profits†that you mention."
Clearly you don't have any financial background and haven't worked in an competitive enterprise.
I tried to find the Steve Martin line from "let's get small" (recorded at the boarding house in San Francisco) where he talks about charging thousands of dollars per seat for his show, culiminating in the statement, "One show, I'm out."
...or some variation thereof. But I couldn't find it. It would've applied here.
I remember listening to that album as a kid pretending I got his humor.
I think if he didn't use props, crude bodily function humor, and played the banjo too, he wouldn't have had a career out side of doing stand up in the UCLA faculty lounge.
“Regardless of what you can sell your product for, you still want to produce for as little as possible. So you can reap the “incredible profits†that you mention.â€
Clearly you don’t have any financial background and haven’t worked in an competitive enterprise.
lol--yes clearly.
It does not take 30 years to save the cash for a house. Make a spreadsheet. Some of you can look back upon the last 10 years in which you could have been socking it away -- you would have enough by now. Perhaps you can buy a cheaper house in a different city. Anyway, why are you not buying a business that can make money instead? A house can save on rent -- I wouldn't count on gains for a long while. That bubble is gone for good.
I tried to find the Steve Martin line from “let’s get smallâ€
LOL! how about Robin Williams early line... "Reality, what a concept".
Lost Cause... no the bubble isn't gone just yet! As for socking away money, be sure to mention you are buying a house and not retiring the former homeowner, before his/her time. Recent homeowners made a huge gain at someone else's expense.
Well, anyone who keeps their long-term savings in an exchange medium (cash) is being very foolish.
Hello from a fool. I have been putting my long term cash into bank and credit union CDs for quite some time. I shop and ladder for the highest rates. I still have a few CDs that are paying 5%-6%, although they will be coming up for renewal soon. I do not feel foolish at all compared to those I know that have invested long term in mutual funds or with a portfolio from an investment manager. I made money, and it is insured to boot.
I think it is foolish for common folk to invest any other way but the following:
Live within your means, so you can:
Pay off all credit cards first and then pay in full each month
Pay off car and then pay cash for replacement
Pay off mortgage by age 45
Put you savings into insured CDs, avoiding all the Churn&Burn, commission generating portfolios of stocks, bonds, commodities, and other inventions of the skimmers.
There may be a place for puts, calls, shorts, warrents, futures and other gambling. Just understand these are for fun and you will lose in the long run. Just like Ceaser's Palace.
I did do rental property, but that is more of a moonlighting part time job than an investment.
Right now I have a paid off residence, one paid off rental property, no car loans or any loans at all, and have over $500k saved up and stashed in various local banks and CUs.
I agree with chrisborden - Deflation, BRING IT ON!
HeadSet
November 1st, 2009 at 8:40 pm | top | quote | email this
Nomograph says
"I agree with chrisborden - Deflation, BRING IT ON!"
Very similar situation here. Agreed with the above post 100%, Gents. The day is coming fast where we will buy the internet genius posters so-called 'assets' for mere pennies on the retail dollar... Some will want pity, they certainly came to the wrong place for that. We tried to help them, they refused to listen. Now suffer. Have children? Too Bad. They will have to suffer too.
Get a Obama flu shot. That will solve all your problems...
The so-called 'financial' people who seem to be the most clueless people here. How do they hold on to a job? This recent statement especially amusing: "Clearly you don’t have any financial background and haven’t worked in an competitive enterprise". Ouch. I guess that means all my paid for hard assets and positive cash flows were mistakes.... Doh.
Joe whentheygonnaputyouout?
I agree with chrisborden - Deflation, BRING IT ON!â€
Very similar situation here.
Unless you are retired, I don't think you will like deflation. Because you will likely lose your job. And even if you have enough savings to live on for the rest of your life, you still probably won't be happy as your kids lose their jobs and have to move back in with you...
Deflation is ugly. Definitely not something to wish for.
Deflation is the great leveler, it will be the Game over financial Reboot that was damn needed over 13 months ago before every Criminal Politician in Washington turned into a Crack addict.
It is now the inevitable unfortunately.
But much like the Flippers didn't give a Rats ass, about my questions of whether my kids would be able to afford a million plus for a Shit hole slum, in a ghetto in Detroit by the time they were old enough to buy a house; at the rate the bubble was going. I will not lose one second of sleep, at the thought that millions of lil crumb snatchers are going to be dolling out, in the form of a horse pill sized dose of Karma on those very same assholes that were perpetuating the myth real estate only goes up.
My daughters living home with the wife and me for an extra Decade, I say Where do I sign up.
I actually love my kids.
Money in the bank and prudence wins every time.
Money in the bank and prudence wins every time.
Not every time. During periods of inflation, money in the bank and prudence are big losers...
Deflation is ugly. Definitely not something to wish for.
The only way to stop deflation would have been to stop he runup in the first place. But the gov was more than happy to encourage massive public and private debt on the way up. Since so many spent future earnings to buy stuff today, they will have nothing to make purchases with in the future. Deflation is here whether you wish for it or not, and despite grand efforts by the gov to prevent it.
Money in the bank and prudence wins every time.
Not every time. During periods of inflation, money in the bank and prudence are big losers…
With money earning hardly 1% money in the bank is safe if not as stupid as putting into current real estate and losing it the very next day.
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