This quote about deleveraging from Bill Gross's February comment for Pimco has become pretty popular the past few days:
"A 30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets----bonds, stocks, real estate and commodities alike----is now deleveraging because of excessive risk and the price of money at the zero-bound. We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time."
Do you agree?
Re: A Beautiful Visualization of Global Risks
Dex
2/1/2012 9:00:28 PM
They think Deleveraging is bad because 1) it is painful 2) it takes time and 3) it seems easier to just ignore it and hope the problem goes away
Re: A Beautiful Visualization of Global Risks
Scott Raynovich
2/1/2012 3:01:49 PM
Wasn't criticizing the chart (which is great), was just trying to make a little jokey-joke. Kind of.
It seems like still a lot of Wall St. hasn't read "The Black Swan." They still act as if everything little "risk" that pops up is a big surprise.
And ... to make things worse... the powers that be are insisting on piling debt upon debt upon leverage. This RAISES the risks. LEVERAGE IS RISK. Why is deleveraging so bad if in the end it leads to a less riksy world?
Re: A Beautiful Visualization of Global Risks
Tenacious
2/1/2012 11:22:23 AM
It is, @Askasa and seems to cover many of the key issues. I like visualizations because they crystallize concepts so clearly.
Re: A Beautiful Visualization of Global Risks
AskAsa
2/1/2012 11:07:31 AM
IWho cares? The visualization is really interesting.
Re: A Beautiful Visualization of Global Risks
Scott Raynovich
2/1/2012 10:55:29 AM
Not included in this chart of risks is gatherings of massive, powerful, rich people in Davos in order to develop groupthink.
This is a stunning visual on Global Risks, based on surveys at the World Economic Forum in Davos.
White JIT inventory systems can prevent waste, I've seen too many managers in charge of ordering or purchasing who were unfamiliarize with alternative shipping methods -- options like ess-than-truckload (LTL) carriers who consolidate loads and routes, or the possibility of coordinating shipments with other companies in a geographic areas.
That's created some wariness of JIT systems, especially if there is a hope or expectation that business is likely to be on an upswing. Bottom line: it makes sense that inventories are growing.
Because of the dependence on global suppliers, manufacturers have to walk an especially fine line when it comes to inventory. JIT is a great concept, until a disaster disrupts supply. And of course it's nice to have a big inventory on hand, but why has the resources to fund it?
Re: Wake up!
tokyogai
2/1/2012 9:00:18 AM
I agree- a real wake up call. I had thought volitility was headed downand the market may just get some recovery. I am now much more cautious.
The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
Tweet This