The age of de-leveraging by Gary Shilling is a must read, according to him, the world is going through a long period of deflation, not inflation as most people anticipated. His simple explanation on why interest rates will remain low for a very long period even with quantitative easing and all those money printing by helicopter ben is Japan. Japan has a debt to GDP of almost 200%, massive money printing activities, quantitative easing, etc, yet their interest rate remains low.

The thing about predictions is that if you make enough of them, eventually they’ll start to come true, and if you are bearish or bullish long enough, you will eventually be right too.

My prediction for the future is inflation, I’ll probably be right when you refer to my statement in 50 years time. Now, worship me.

12 investments to sell or avoid

• Manufacturers and distributors of big-ticket – Consumer purchases such as cars, appliances, air travel, cruises, and leisure and hospitality providers. As consumers save more, they’ll curtail spending on expensive postponable items.
• Credit card and other lenders to consumers – They’ll be burdened for years by the new focus on saving, and horror stories about what personal debt can do to you.
• Conventional home builders and suppliers – Burdened by excess inventories from the past building boom and the evaporation of home-owner investment interest.
• Antiques, art and other tangibles – They need high inflation and upper-income people flush with cash to do well.
• Banks and similar financial institutions – Their executives are likely to act very conservatively for a generation, with a focus on lowering risk rather than boosting earnings.
• “Junk” (high-risk) securities – Deflation will be lethal because the borrowers will find it difficult if not impossible to service their bonds.
• Flailing companies – Below-average revenue growth, high fixed costs and big debts will be “a lethal combination in an era of slow growth.”
• Low- and old-tech capital equipment producers – In the advanced economies the focus will be on productivity-enhancing equipment rather than capacity expansion.
• Commercial real estate – Vacancies are rising, rental levels for new tenants have collapsed and prices are plunging.
• Commodities – Excess supply and muted demand will keep prices under pressure, but more important will be the collapse of investment/speculative demand.
• Developing country stocks and bonds – Emerging markets overwhelmingly depend for their growth on exports to the US, where there is going to be major retrenchment in demand.
• Japan – “a slow-train wreck.” An ageing and shrinking population, cautious consumers, huge government debt, failure of the money-printing policy.

10 investments to buy

• Treasury and other high-quality bonds – Shilling says he has been a 30-year Treasury bull since 1981. The “bond rally of a lifetime” is going to continue as deleveraging causes deflation. Even Ben Bernanke won’t be able to stop that.
• Income-producing securities and dividend payers – There won’t be much growth, so you might as well collect dividends. A few examples include Procter and Gamble (PG), Unilever (UN), Coca Cola (KO) and PepsiCo (PEP).
• Food and other consumer staples – Consumer discretionary spending is getting whacked, but people still need to buy bread and socks. Stores like Walmart are well-positioned to grow.
• Small luxuries – People want to spend money on something. Shilling says items like snakeskin tote bags, five-blade razors and designer jeans could be the new type of conspicuous consumption, taking the place of big ticket items like sports cars.
• The US Dollar – With Europe and Japan drowning in debt and emerging markets verging on a crash, the dollar is going to start looking pretty good. Shilling says the dollar will remain the world’s currency, with no real competition from gold or the yuan. Meanwhile, America will be mired in deflation.
• Investment managers and financial planners – Low investment returns will discourage day-traders and encourage the use of professionals.
• Factory-built houses and rental apartments – Cheap small homes are the order of the day, as old people look for a cheap retirement spot and young people look for a small mortgage. Renting will be a more and more popular strategy.
• Health care companies – As America ages, the health care industry seems unstoppable. Even Obama’s health care reform ended up boosting earnings for many companies.
• Productivity enhancers – Anything that helps juice bottom lines will do well in the new era. This includes consulting groups, computers, internet, biotech and telecom.
• North American energy – Shilling is bullish on deepwater drilling and natural gas, as well as coal and nuclear. He has particularly high hopes for the massive Canadian oil sands

yeah – all your base are belong to us. kiki and her favorite can food.

How can you not love George Carlin? YouTube all of his videos, simply amazing. He thinks!

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