deflationgreenspun.com : LUSENET : Bill Parish : One Thread
hi mr parish
wondering if you think usa will experience deflation in the next few months and years as the economy slowly collapses.also do you think small and regional banks will be innune from a major downturn and if the share price on the stock exchange will go down on the banks.
-- marty (firstname.lastname@example.org), April 22, 2001
Hello Marty. Regarding your questions: 1) Deflation - If so, only after a period of inflation. Sadly the Federal Reserve raised rates when it should have supported the SEC and used reform in how earnings are reported to deflate Microsoft's pyramid scheme. Their failure triggered a wave of mergers designed to compete for capital with Microsoft's pyramid and these mergers have led to industry based price fixing, as evidenced in the energy sector as we witness a manufactured energy crisis.
2)Regional banks should do fine if their loan portfolios are well diversified. At times these banks overconcentrate in one area, i.e. oil leases in the 1980's, commercial property, etc. A good mix coupled with the security offered via the FDIC to depositors should ensure stability. Of much greater concern is Citigroup and the other banking giants engaged in a variety of egregious practices and leveraged speculations that might disrupt the economy.
-- Bill Parish (email@example.com), April 23, 2001.