SOS Portfolio update & Dubai Debt

Refer to blog in Oct 12, 2009, Inflationist vs Deflationist - titled Ready Set Go

As at 27 Nov 2009

Inflationist UP 2.9%

Deflationist DOWN 3.27%

Well, both portfolios is rather flat, not much changes.

One thing for sure, the KBW Financial Index is still about 60% down from its 2007 peak.
And on 25 November 2009, Dubai's debt burst, about USD80 billion. So is RBS in UK, and the German banks.

The build up of the negative social mood that cause Lehman Brothers to collapse, not Lehman Brothers that cause the crisis.

Similarly, the build up of the negative social mood that cause Dubai property to collapse, not Dubai property that cause the crisis

MyView

One think that is sure in US is more banks are going belly up each month. NPL is building up, some of them are postponed using "creative" accounting. Commercial property is crashing. Most loans given out in US or Europe are loan the is not "very productive", i.e. loans that has the ability to create new income to repay the loans and interests.

So these "toxic" loans is increasing as days goes by. Printing money will not help, because printing money is exclusive from giving credit. One may continue to print, providing credit requires the evalution of the credit worthiness of a business.

With the implosion of "toxic" debt, credit creation is collapsing as a result of the viable credit worthiness is hard to come by as a result of collapsing debt and consumption.