All Markets Will Continue To Rise Forever and Ever Amen Because It Is Our Birthright

[MattK]

http://www.marketoracle.co.uk/Article657.html

One of the nice things about our series of Safehaven articles on Asset Deflation is that we have been on such a tiny island compared to the "All Markets Will Continue To Rise Forever and Ever Amen Because It Is Our Birthright And The Fed Will Surely Guarantee It" set, our small legion of open-minded and perceptive readers write in with increasing frequency and say things like, "Yo, Steve, isn't it time for another deflation update?"

In case you missed our initial warnings, here are links to two of our Safehaven articles on asset deflation: the first from May of 2005 ( http://www.safehaven.com/showarticle.cfm?id=3009 ), the other from September of 2006 ( http://www.safehaven.com/showarticle.cfm?id=5844 ). Please take a moment to look them over if you have 1) the time or, 2) the desire to end up with a lot of money when your neighbors are 1) broke and 2) standing in bread lines a couple years from now.

The funny thing is that some people still don't realize that we are already in an asset deflationary environment. If you had taken our advice and sold your real estate, metals and stocks when our series of articles ran and held the cash in something like a T. Rowe Price Treasury Money account (current safe yield: 4.50%), you'd be even more poised to kick some boo-tay in the coming, otherwise-frightening, take-no-prisoners environment. The savvy men and women are already out and have completely sidestepped the coming storm, but when "everyone else" figures out what's going on, it's sayonara to pretty much everything we hold dear (like having money and assets, for instance).

Do not -- I mean, DO NOT -- put your financial fate in the hands of those same CNBC (aka General Electric) cheerleaders, Wall Street pimps, Pollyannaish U.S. policymakers or guys who write articles featuring a bunch of charts as a means of convincing you that they know what the hell they're talking about. Don't listen to Treasury Secretary Henry Paulson when he steps to the podium to say that the "world economy is strong" ( What's he going to say? " The world economy is unbelievably precarious and we're all going to hell in a handbasket! "? ). In the coming months, quotes from Paulson, Ben Bernanke and George Bush will sound an awful lot like another famous assurance from long ago: "The Titanic is unsinkable, Molly! I tell you -- unsinkable!"

Instead, my friends, use your gut, your instincts, your sense that the economy is slowing down in your own community and that people are pulling in their speculative horns. Turn off the nightly Larry Kudlow sis-boom-bah routine and utilize your own ability to see through the lunacy. Asset values have begun heading down and we are nowhere near "the bottom." More like mid-to-high forehead, if you really want to know.

The jig is now completely up, and Monday's headline from Bloomberg News pretty much seals the deal (" Countrywide Ends No-Money-Down Loans "). There is no going back now. All that remains is for everyone in America to come to the realization that values are not going to go back up any time soon. We are entering the "lack-of-liquidity" phase of our program, more than exacerbated by an unwelcome and untimely credit contraction, as most Americans have no savings and won't want to borrow from lenders who will be increasingly reluctant to lend anyway.

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[jonesonyou]

Good luck.