The Week Ahead....expect confirmation of deflation

[RedEarth]

video..........

WSJ MarketBeat blogger David Gaffen tells Dow Jones Newswires’ Simon Constable to expect deflation. Plus, the Treasury releases its international capital flows report.

and.....

Data on home builders and housing starts kick off a holiday-shortened week. Fed chairman Ben Bernanke will address the Fed’s balance sheet, and minutes will be released from the last Federal Reserve meeting.

http://www.ritholtz.com/blog/2009/02/the-week-ahead-2/

[bluestateguy]

1. I'm still not seeing it at the grocery store

In fact it seems that the price of cheese seems to have gone way up.

[CoffeeCat]

7. I would agree...

...that the prices in the grocery stores have not fallen.

And you're right, the price of cheese is outrageous. It's almost doubled. Milk, eggs, bread and other staples
increased dramatically for a while. Those prices have leveled off, but cheese remains very high. I wonder why?

I've also noticed that grocery stores are getting very competitive with prices--in an effort to lure in more
customers. We have Super Walmart, SuperTarget, and a few other grocery stores (chain stores). These stores aren't
making as much money, because consumers are spending less---so they appear to trying to lure consumers into stores
with very cheap prices on some advertised specials. For example, one local grocery store advertised 27 cent Mac & Cheese,
88 cents for a lb of seedless grapes and 99 cent ice-cream.

I guess they figure that they'll take a loss on certain items, to get people into their store.

I've also noticed that there are a lot more coupons in the stores. Many items have $1 peelie coupons stuck on the
front, and there are also high-value, tear-pad coupons (usually for $1 or more) for many products--right in the aisles.

I'm also finding lots of coupon books in the stores.

It's obvious that name-brand products are suffering--as the low price of generics is favored.

It's all very interesting...

[NC_Nurse]

2. So what does that mean for those of us who have no clue what to do?

:shrug:

[izquierdista]

3. Cash is king

Put it under the mattress. Find someone over 80 and have them explain how to get by paying cash for everything. Don't take out any new loans and sell your collectibles for cash. If a salesman asks you if you would like to finance a purchase, ask him how much of a discount you get for paying with greenbacks.

[NC_Nurse]

4. Thanks for the tips. I have already paid off all of my credit cards and tried to

bolster my savings. What I don't know is how to deal with my investments. I have some stocks, and some rental homes.
I read somewhere that bonds were the place to be during deflation, but I didn't really understand the article.

My ooverhead is low at the moment since we're living with my parents to help care for my mom. That's why I have the luxury of
thinking about investing. Otherwise, I'd be scraping to get by at all.

[izquierdista]

6. Everyone is used to inflation

They want to borrow money so they can pay it back later with cheaper dollars. The opposite is true in deflation. Better to be a lender (own bonds) where the borrower has to pay you back with dollars that are harder and harder to come by.

The big unknown is how long such a deflation might last. If it is only a couple of quarters, then it is not worth selling your rental real estate. If the protracted slide were to last 5 years, and they aren't owned free and clear, it would be better to sell them sooner for a higher price than later for a lower price.

[NC_Nurse]

8. My plan is to pay down the real estate and use it for income in retirement.

As long as I plan to rent it and not sell it for a profit, I suppose I can hang onto it...right?

[GoesTo11]

5. This is the first raise I've gotten in a long time, in real terms.

Hope the man doesn't figure it out and give me a pay cut.

[DemReadingDU]

10. When I was working and a bunch of us received large raises...

a few months later, we all got laid off.

:(

[Javaman]

9. On the upside, movies will be a nickle again!

sorry, couldn'd resist the snark.