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The Joy Of Deflation

By someone else follow someone else   2008 Dec 18, 1:48am 32,308 views   285 comments   watch   nsfw   quote   share    


Why is deflation written about as if it were a bad thing? Personally, I love deflation because it means lower prices for pretty much everything.

OK, I can see that people will hold cash instead of investing it, because the cash is increasing in value. But that will end eventually as people spend the cash (unless the Fed just prints forever).

And I can see that it's hard to start up a business knowing that profits will probably decrease in nominal terms, but that can be managed, because costs will decrease as well. And if the business generates cash, that cash is more worth getting in a deflationary environment.

Maybe deflation is exactly what we need for a while, to wipe out foolish debtors and get the economy back into a sustainable state.



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246   danville woman   ignore (0)   2009 Jan 2, 4:01am     ↓ dislike (0)   quote   flag      


I just re-read your response. It seems that you even go through a dealer with www.treasurydirect.gov which seems odd and very misleading. Their website implies that you are dealing directly with the government and not an intermediary. Scary stuff.

247   EBGuy   ignore (1)   2009 Jan 2, 6:33am     ↓ dislike (0)   quote   flag      

Happy New Year all. According to the latest H.3 report from the Fed, nonborrowed reserves has gone positive! Also note, the latest TAF auction (85 days, $150B) had a bid-to-cover ratio of .69 ($102B); the previous auction (85 days ago) had a bid-to-cover of .92 ($138B) so things seem to be settling down a bit (or at least moving to the more exotic Fed/Treasury programs). The Treasury Supplemental account in the H.4.1 release also appears to be getting paid down.

248   EBGuy   ignore (1)   2009 Jan 2, 7:06am     ↓ dislike (0)   quote   flag      

Using 2% MoM declines we reach equilibrium now in April/May of 2009 - but that is relativeto retracing the bubble using an anual BA historic appreciation of 4.25%.
Duke, somebody out there agrees with you. A C/S SF Home Price Index future for May 09 sold for 119 yesterday. Also, check out the Nov 09 future that traded hands today for 116.

249   Paul189   ignore (0)   2009 Jan 2, 11:57pm     ↓ dislike (0)   quote   flag      


"TreasuryDirect is brought to you by the U.S. Department of the Treasury Bureau of the Public Debt."

"About TreasuryDirect
TreasuryDirect is the first and only financial services website that lets you buy and redeem securities directly from the U.S. Department of the Treasury in paperless electronic form."

250   PermaRenter   ignore (20)   2009 Jan 3, 3:31am     ↓ dislike (0)   quote   flag      

Venture Source said the median age of the venture-backed firm acquired in 2008 hit a record 6.5 years. Of the seven that went public last year, the median age was 8.3 years, also a record.

"The ever-increasing amount of time it takes for a company to go public or get acquired is stretching out the lifecycle of venture funds and therefore returns to venture firms and their limited partners," Canning said.

All of this goes to explain why veteran Silicon Valley investment firms such as Sequoia Capital and Benchmark Capital warned startups in October to lay off workers and slow hiring to extend their runway - the length of time they can operate on invested capital before cash flow carries them aloft.

"In market downturns, frugality is not only a virtue, but also it could be the difference between survival and failure," said Benchmark partner Bill Gurley. "You should watch 'months of cash' as your most important variable."

251   Peter P   ignore (0)   2009 Jan 3, 3:53am     ↓ dislike (0)   quote   flag      

Frugality may have its place, but one also needs to hedge for the end-of-the-world risk. :) If the world ends tomorrow, have you enjoyed enough, or have you delayed your gratification beyond the end of time?

252   BlowSunshine   ignore (0)   2009 Jan 3, 9:02am     ↓ dislike (0)   quote   flag      

A quote from a 1924 edition of the American Bankers Association Journal sums up what is currently happening:

"When, through the process of law, the common people lose their homes, they will become more docile and more easily governed through the strong arm of government applied by a central power of wealth under leading financiers. These truths are well known among our principal men who are now engaged in forming imperialism to govern the world. By dividing the voter through the political party system, we can get them to expend their energies in fighting for questions of no importance."

The Secret Bailout of J.P. Morgan

Why Paulson Let Lehman Brothers Fail

253   justme   ignore (0)   2009 Jan 3, 1:13pm     ↓ dislike (0)   quote   flag      

Blow SUYA,

So the claim is that Paulson let Lehman fail in order to give JP Morgan a covert bailout under the guise of helping JP Morgan acquire Lehman.

Pretty far fetched stuff, but perhaps not completely unbelievable.

The website looks pretty kooky, though.The site would be more believable if it backed up the claims with references, e.g. the claim about creating new classes of (lower priced) put options with expiration dates only 5-8 dates ahead.

254   PermaRenter   ignore (20)   2009 Jan 3, 1:16pm     ↓ dislike (0)   quote   flag      

In over-allocating money to one position, investors are typically prone to several short cuts that get them in trouble. One primary mistake is uniquely intertwined with Madoff's alleged scheme -- the allure of consistent small gains. A chart of Madoff's purported returns shows a line going steadily up, month after month, 1 or 2 percent. Those kinds of gains are intoxicating. Richard Peterson, a psychiatrist who co-founded MarketPsych, a Los Angeles psychological and financial consulting group, said we actually fall in love with them.

"It's like a slot machine that pays you a little each time," he said. "Over time you kind of fall in love with that machine. You'll actually have the hormones and strong attachment and bonding. You trust it. You want more satisfaction from these gains."

Peterson pointed to a famous study in Taiwan showing that gamblers chose a strategy paying them repeated small amounts even if at some point they had to take a huge loss. In more than 200 trials, the gamblers were given different decks to select cards from. In one deck, on average four of the five cards produced small gains, while the fifth card wiped out the wins and led them down a money losing path. The other decks of cards produced, on average, four small losses and one big win, which netted out to overall gains. The researchers were stunned when, given a choice, gamblers continued to want to pull cards from the small-gain deck.

"We like these consistent gains," Peterson said. "You can't underestimate their power."

255   justme   ignore (0)   2009 Jan 3, 1:29pm     ↓ dislike (0)   quote   flag      


Kind of like the 1991-2000 "buy-and-hold" stock market.

256   kewp   ignore (0)   2009 Jan 3, 4:24pm     ↓ dislike (0)   quote   flag      

In over-allocating money to one position, investors are typically prone to several short cuts that get them in trouble. One primary mistake is uniquely intertwined with Madoff’s alleged scheme — the allure of consistent small gains. A chart of Madoff’s purported returns shows a line going steadily up, month after month, 1 or 2 percent.

Is this for real?

What a crappy Ponzi scheme! I beat him last year *without* cheating!

257   DennisN   ignore (1)   2009 Jan 4, 12:15am     ↓ dislike (0)   quote   flag      

One of the best things about deflation is cheap lobsters.

Wait a minute, didn't someone else post this?

258   PermaRenter   ignore (20)   2009 Jan 4, 1:14am     ↓ dislike (0)   quote   flag      

Duped employees and clients of alleged scammer Bernard Madoff are bitterly selling off the swag they received from his company on eBay.

It's a whole new category of collectibles, with more than 100 promotional trinkets bearing the name or symbol of Bernard L. Madoff Investment Securities. They were given to clients and employees over the years as tokens of appreciation, even as Madoff was allegedly stealing billions from investors.

"Emom1013" is selling a pair of $20 T-shirts given out at the 2006 company picnic at the Madoff family's Long Island, N.Y., estate.

The seller writes: "The proceeds from this auction go directly to a family whose husband/father is facing being out of a job and health insurance thanks to good old Bernie."

Other items include humidors, binoculars, beach towels, coolers, mousepads, shirts and jackets. The most expensive doodads so far include a Madoff flashlight that sold for $387 and a fleece sweater that went for $455.

259   DennisN   ignore (1)   2009 Jan 4, 1:51am     ↓ dislike (0)   quote   flag      

Somehow "Madoff" and "fleece" just go together.

260   OO   ignore (0)   2009 Jan 4, 2:18am     ↓ dislike (0)   quote   flag      

Re: Microsoft layoff, talked to a friend higher up the food chain in Redmond, he said it is NOT off the table, but hard to say 10% or 17%, however, it will be a big number. The way that MSFT deals with attrition or "soft" lay off is, they do a large scale reorg, and then give you 1 month to find a job internally, when the 1 month is up and you still cannot find a job, you must RESIGN, so that MSFT pays NO severance to you. A re-orged employee has to sign such a document to give up severance before being allowed to do an internal job search. In the good ole days, internal job search can be allowed to last 2 months, but they cut it down in the last decade since MSFT stock price peaked.

So his conclusion is, there won't be an outright layoff, if SteveB goes the outright layoff route, then things will be really really stinky. Most probably they are going the large scale reorg route while drastically reducing internal openings so that it is guaranteed that a big number of MSFT employees will have to "resign" 30 days later. His org is going through some budget re-review for cuts, so the layoff "rumor" is not ungrounded.

261   Peter P   ignore (0)   2009 Jan 4, 3:00am     ↓ dislike (0)   quote   flag      

One of the best things about deflation is cheap lobsters.

Wait a minute, didn’t someone else post this?

I wonder who else in the world would post such a thing.

262   HeadSet   ignore (3)   2009 Jan 4, 3:14am     ↓ dislike (0)   quote   flag      

In respose to:
A chart of Madoff’s purported returns shows a line going steadily up, month after month, 1 or 2 percent.

Kewp said:

Is this for real?

What a crappy Ponzi scheme! I beat him last year *without* cheating!

You beat 12%-24% on your investments last year (1%-2% per month)?

263   justme   ignore (0)   2009 Jan 4, 3:16am     ↓ dislike (0)   quote   flag      

MIcrosoft sounds like such a NICE place to work. Maybe they can apply for some help from the Bill Gates foundation?

What happens if you do not sign the no-severance clause -- you get laid off and get severance?

264   Peter P   ignore (0)   2009 Jan 4, 3:20am     ↓ dislike (0)   quote   flag      

MIcrosoft sounds like such a NICE place to work. Maybe they can apply for some help from the Bill Gates foundation?

What makes you think that companies layoff employees mostly because they need cash?

265   justme   ignore (0)   2009 Jan 4, 3:37am     ↓ dislike (0)   quote   flag      

they == the employees

266   Peter P   ignore (0)   2009 Jan 4, 4:01am     ↓ dislike (0)   quote   flag      

Oh. :) Never mind.

267   PermaRenter   ignore (20)   2009 Jan 4, 4:05am     ↓ dislike (0)   quote   flag      

Twitter, a service that can send a 140-character message to any computer or cell phone but, so far, has no way to make money. Founded by Evan Williams, the 36-year-old Web entrepreneur who helped popularize blogging, Twitter is an example of the whimsical developments that have, until now, found Silicon Valley tolerant of failures in the pursuit of success.

268   OO   ignore (0)   2009 Jan 4, 4:07am     ↓ dislike (0)   quote   flag      


Microsoft is a pretty harsh place to work. They have forced curve distribution for performance review, which means even if you perform well, but if your org's colleagues are all performing better, you will get a low point anyway. In the good ole days when they give out stock options, only the top 5% of the department got 90% of the stock options, leaving 10% to the mediocre and under-performers (under forced curve distribution) got none, so it is a place where winners take all. Now, since they are not giving out stock options any more, they just reorg the hell out of under-performers. I never asked what will happen if you choose not to sign over severance, I will ask next time I talk to him.

However, Microsoft does offer very generous medical insurance package, it is probably the best in the industry. They also have this paternity leave for new dads to take off some time while on paycheck. You just have to work your butt off to earn these privileges. But yes, it is very hostile place to work, most of my Seattle friends work there, but they all agree that it is not a happy place to work, but if you live in Seattle, you have no choice.

269   justme   ignore (0)   2009 Jan 4, 4:18am     ↓ dislike (0)   quote   flag      


I can only imagine.

(You may not agree with the rest of this)

No wonder their products suck so badly. It is amazing how little the company accomplishes with all the resources that they expend. Must be all that hysterical "competition" and "performance" going on all day long.

I have a better idea for Microsoft: Grade all your products on a curve and throw out the lower 90%.

270   PermaRenter   ignore (20)   2009 Jan 4, 4:34am     ↓ dislike (0)   quote   flag      


I can assure you that border fence will go up followed by amnesty ... that is the game plan for Democrats ....

271   justme   ignore (0)   2009 Jan 4, 4:38am     ↓ dislike (0)   quote   flag      

Uh, Bap33, Obama is not QUITE president yet. Wait and see,

272   OO   ignore (0)   2009 Jan 4, 7:22am     ↓ dislike (0)   quote   flag      


I believe that the biggest reason for MSFT's decline is because they have lost their best talents around 2000. I know a few old-timers who joined prior to IPO or Windows 3.0 who helped build the company came down to the Bay Area, and ironically, MOST of the ex-MSFTies in the Bay Area ended up in Google. Those who stayed in Seattle started their own business or VC. The team that trashed Netscape have almost completely left.

The internal system worked for MSFT for many years, and it is a part of its unique culture. But when the growth phase is over, the real talents moved on to better opportunities, MSFT is stuck with many employees who are either leeches or political animals who only know how to do performance reviews.

I have met quite a few members on their OS team, and let me put it this way, I am not surprised that they churn out shitty product. And if these few were to come down and apply for a job at a company known for being difficult to get in, e.g. google, they won't stand a chance.

273   Peter P   ignore (0)   2009 Jan 4, 8:15am     ↓ dislike (0)   quote   flag      

And if these few were to come down and apply for a job at a company known for being difficult to get in, e.g. google, they won’t stand a chance.

I thought Google is more growth-dependent than Microsoft. Perhaps they see this and choose to stay with the largest software company in the world?

274   PermaRenter   ignore (20)   2009 Jan 4, 8:34am     ↓ dislike (0)   quote   flag      

>> I thought Google is more growth-dependent than Microsoft

I have been approached by Google recruiters several times. We never hit off since they could not explain career path in Google. I have been manager/principal engineer at telecom and internet space.

275   OO   ignore (0)   2009 Jan 4, 9:58am     ↓ dislike (0)   quote   flag      

Microsoft is actually on a dying path.

A friend of mine is in their office applications group, and he said the corporates are completely getting off the upgrade path, and once they get off, they never come back for upgrades. About 1/3 of those who bought the latest Office license didn't even get around to install the last version (not sure if this number is still current, but I can only imagine it getting worse), so when Microsoft is trying to upsell the next version, the CTOs will have plenty of reasons to say no, not to mention that open-source office has become a real threat. Applications is a VERY major source of MSFT revenue.

Microsoft online is a mess, search is a joke, and when applications revenue dwindles there is nothing that can take up the void.

Most people who are still with Microsoft just don't have a choice to go elsewhere. 10, 15 years ago, you would meet really smart asses from MSFT, but thank god they are all gone. Why do the left-overs still stay with MSFT? Well, like my friend said, if you are comfortable with Seattle because you bought a house, your family and friends are there, where else can you find a stable job apart from MSFT? AMZN's development team is way smaller than MSFT. It is quite difficult for Bay Area people to understand, but I got offer at MSFT a few years ago, and after researching around Seattle to see the next opportunity after MSFT, I decided that Seattle was an one-trick pony. MSFT, or nothing else.

276   thenuttyneutron   ignore (0)   2009 Jan 4, 10:03am     ↓ dislike (0)   quote   flag      

Today I played Monopoly with the wife on the Playstation. I remembered as a boy growing up, my brothers and I would rob the bank and split the cash evenly anytime one of us got into trouble.

This board game has become the new reality.

277   B.A.C.A.H.   ignore (0)   2009 Jan 4, 10:48am     ↓ dislike (0)   quote   flag      

All those once a year upgrades seemed like the software version of the Evil Pair of Twins, the hardware phenomenon so many treated like god's gospel, Moore's Law. Some kind of positive feedback loop between the need for hardware upgrades and the software upgrades, to a piece of people's discretionary money for things like games or other leisure. Now people don't have the discretionary money for frivolous stuff like that and so the jig is up.

You could replace "MSFT" in OO's entries with the symbol for hardware companies, and the overall paragraph would be just as accurate.

278   Peter P   ignore (0)   2009 Jan 4, 10:57am     ↓ dislike (0)   quote   flag      

I don't know... I have Vista Ultimate on my laptop and I am extremely happy with it.

I just cannot imagine using open source office programs because they do not function like Microsoft Office. You know, once you are used to a particular software personality it is hard to switch away.

After a few years of using Firefox, I am now back with IE.

279   PermaRenter   ignore (20)   2009 Jan 4, 11:09am     ↓ dislike (0)   quote   flag      

Jan. 2 (Bloomberg) -- U.S. regulators working to untangle Bernard Madoff’s alleged $50 billion Ponzi scheme are probing other money managers suspected of using similar tactics, two people with knowledge of the inquiries said.

The U.S. Securities and Exchange Commission is pursuing at least one case in which investors may have been cheated out of as much as $1 billion, according to a person, who declined to name the manager and asked not to be identified because the probe isn’t public.

Regulators may discover additional Ponzi arrangements as declining stock markets prompt investors to withdraw their cash and they question how their money is being managed. This week, the SEC said it halted what the agency described as a $23 million scam targeting Haitian-Americans, and said the Florida- based operators as recently as last month sought more investors.

The new cases “signal it’s become an enforcement priority,” said University of Rochester President Joel Seligman, who wrote a history book on the SEC. After Madoff’s alleged fraud “you’ve got to check hard and see if there is more like it in the marketplace.”

280   PermaRenter   ignore (20)   2009 Jan 4, 11:18am     ↓ dislike (0)   quote   flag      

Herhold: Girlfriend at center of storm testifies in Achilli murder hearing
By Scott Herhold, Mercury News

It was the moment everyone had waited for in the Mark Achilli murder case, the testimony of the woman at the center of the storm. "Your honor," Deputy District Attorney Jeff Rosen said Wednesday, "the people call Tessa Donnelly."

In strode a tall woman in her 20s, wearing a charcoal overcoat and a lavender scarf, with her long hair done up in a bun. As she settled in, she looked very much like a parochial schoolgirl called before the dean to explain herself.

This was the first time the public had heard from Donnelly, the woman that both defendant and victim strove to win. She offered no direct testimony on the killing. Instead, she unveiled some of the messy details of a love triangle that police say led to Achilli's death.

Donnelly's testimony was as bundled as her attire. Where other witnesses in the 3-day-old preliminary hearing have been eager to wander off on tangents, she kept her answers terse. Only an occasional Mona Lisa-style smile gave something of her personality away.

The crowded courtroom of Superior Court Judge Rodney Stafford still leaned on every stubborn syllable as her private life, now painfully public after the killing of Achilli, spilled out.

Donnelly acknowledged that she had been the girlfriend of both Achilli, a 53-year-old Los Gatos businessman who was shot to death March 14, and of Esequiel "Paul" Garcia, 30, the restaurant and bar owner alleged to have paid for Achilli's murder.

The devil was in the details — or perhaps in the text messages. Under Rosen's questioning, Donnelly told her story: She had been Achilli's girlfriend for about four years before September 2007, when she broke up with him because he was seeing another woman.

Later that month, she testified, she began dating Garcia, who had just purchased Mountain Charley's bar and the 180 Restaurant and Lounge from Achilli. Donnelly worked at both establishments as a bar manager. In effect, one boss supplanted the other as her boyfriend.

While the relationship with Garcia went well at first, Donnelly said, it quickly deteriorated, and she broke off having sex with Garcia in November. She went back to Achilli the next month but continued to spend nights with Garcia and take trips with him in early 2008 to Las Vegas, Portland and Carmel.

The dark-haired woman told the court that her physical relationship with Garcia over this period was largely limited to kissing and fondling, and that she had lied when she told him an ovarian cyst made intercourse painful. Asked whether she had sex with Garcia over Valentine's Day in Carmel, she said, "I'm not positive."

Asked prosecutor Rosen. "Did you really love Mark, or did you really love Paul?"

"I really loved Mark," she responded.

The numbers told part of that story. In the first 21/2 months of 2008, Donnelly and Achilli exchanged 632 phone calls, a little less than nine a day. Over the same period, she exchanged 425 calls with Garcia. But it veered toward the one-sided: Garcia called her 271 times. She called him 154 times.

Rosen also took Donnelly through a barrage of text messages that an exasperated Garcia had sent to her in the two weeks before Achilli was brought down in a hail of bullets outside his Overlook Road condominium.

"I guess I was wrong about u," said one Garcia message dated March 1, the day after Achilli barged into Donnelly's apartment and found her with Garcia. "The ball is in your court." Another, dated four days later, said, "U playing games with me? Thought we r going out?" (And yes, for the record, this is the way text messages are really written: It drives the grammatical experts among my readers crazy.)

On cross-examination, Garcia's attorney, Harry Robertson, managed to inflict some damage on Donnelly's story. She admitted that she was a heavy user of marijuana and alcohol, occasionally blacking out from drinking too much.

Robertson also made a plausible case that her memory was selective: After viewing a prosecution printout, Donnelly said she remembered the text messages Garcia sent her. But she testified she didn't remember any that she had sent him — even when it was obvious he was responding to her.

It was also clear that Donnelly took a cold-eyed realist's view of her relationship with Garcia. Although she acknowledged that he was interested in marrying her, she said she had continued going out with him in part because he was her boss, and in part because her real love, Achilli, was still seeing another woman.

"You misled both Mark Achilli and Paul Garcia,'' Robertson said. "Did you see anything wrong with that?'' Donnelly was saved from answering by a quick objection from prosecutor Rosen. The defense had still scored a point: Just how important it is in terms of an alleged contract killing isn't very clear.

The hearing on the charges against Garcia and two other men — Miguel Chaidez, 22, who is accused of arranging logistics for the killing, and Lucio Estrada, 25, the suspected triggerman — will continue today. The key witness is expected to be a bouncer at Mountain Charley's, Daniel Chaidez, one of the original defendants who has agreed to cooperate with the prosecution.

281   OO   ignore (0)   2009 Jan 4, 2:01pm     ↓ dislike (0)   quote   flag      

Open Office works just like Office, in fact, it is better, because the new Office changes the location of menu just for the sake of it - or else people don't know why they are upgrading.

I don't know enough about Google to compare it to Microsoft. But here is something that I observe among my friends at both companies. The Microsoft friends (from at least 3 different groups at Redmond) are very open about the issues within Microsoft, politics among internal orgs, and their product plans etc. it seems to me that they do not really care about Microsoft, because if I care about my employer, I would shut the hell up and only do the official line even in front of friends. There is no pride of employment.

My Google friends, however, are very hush hush about what they do, what the internal org is like, and revert to official lines for all my product plan questions. It seems to me that they care about their employer, and their own employment. There is plenty of pride of employment.

282   justme   ignore (0)   2009 Jan 5, 2:00am     ↓ dislike (0)   quote   flag      


The differences is mainly attributable to the relative ages of the companies.

283   justme   ignore (0)   2009 Jan 5, 4:22am     ↓ dislike (0)   quote   flag      

Leon Panetta for CIA Director !! Damn, Obama is smart.

284   justme   ignore (0)   2009 Jan 5, 6:48am     ↓ dislike (0)   quote   flag      


There was a photo of Tessa Donnelly in the paper, and the worst part of the whole story is she was NOT worth fighting over by any stretch of the imagination.

And what kind of freak couple talks on the average of 9 times a day over several months. And the rival was not far behind -- at the same time! Some people....

285   kewp   ignore (0)   2009 Jan 7, 7:43am     ↓ dislike (0)   quote   flag      

You beat 12%-24% on your investments last year (1%-2% per month)?

I only made one investment over the last two years, the double-inverse financials ETF, SKF.

Once I doubled my money I cashed out.

My investment philosophy is to stay all in cash and then take short positions against collapsing speculative bubbles. It's worked well for me so far!

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