StockMarketFunding.com head trader Mario Marciano notes that our banking system appears to be unable to widely provide new credit to the general economy.
Mr. Marciano has been telling SMF Traders and Investors this fact since the start of 2006. We started to see a change in our credit markets and deflation and now SMF can clearly see a trend is developing and becoming a real threat.
According to StockMarketFunding.com's estimations, we have already seen household balance sheets shrink by $12.1 tln from their peak in 2007 to the present. However, in our opinion, these values still have further to fall as asset appreciation in recent years was fueled by cheaper and more freely available credit that is no longer available.
The unwind we face is not one that was one economic cycle in the making, but a product from prolonged "re-flating." The Fed's extraordinary commitment to put its balance sheet to work through its quantitative easing tactics should mitigate any further tail risks from occurring if appropriately managed, as it has in essence declared that it will provide a bid to the market where necessary.
Mr. Marciano at SMF is telling people we are just in a phase that continues the downward pressure to deflation. Not only that outside of the potential new stimulus it is totally directed to new building and overhauling our bridges and government projects that are coming.
However lets talk about the consumer what are we doing to overhauling them?
The consumer is a very important part of our economy. As their spending goes down, the effects that are caused from far less consumer spending spills over into other areas around the world and the snow ball effects from deflation begins.
This a major concern at StockMarketFunding.com and we will be updating investors on deflation. Where does it starts? What are the cause and effect of deflation going into 2009? How can I profit from the stock market in an environment such as the one we are in now?
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