Category: Economic TrendsInteresting quote from a July 31 article in the Wall Street Journal about reassessing risk: "(Il)liquidity risk is the ultimate killer. Every banking crisis ultimately becomes a liquidity crisis. Northern Rock and Bear Stearns are potent reminders that banking is a confidence game which relies on the willingness of depositors and counterparties to fund highly leveraged balance sheets." If I didn't know any better, I would think that Elliott Wave International's analysts are writing for the WSJ!Responder: Vadim Pokhlebkin Date: 8/5/2008Great find! This is exactly what Bob Prechter warned about 6 years ago in Conquer the Crash (Ch. 9, pp. 90-91):"What Triggers the Change to Deflation. A trend of credit expansion has two components: the general willingness to lend and borrow and the general ability of borrowers to pay interest and principal. These components depend upon...the trend of people's confidence... The psychological aspect of deflation and depression cannot be overstated. When the social mood trend changes from optimism to pessimism, creditors, debtors, producers and consumers change their primary orientation from expansion to conservation. As creditors become more conservative, they slow their lending. As debtors and potential debtors become more conservative, they borrow less or not at all. As consumers become more conservative, they save more and spend less..." --______________________________________Yours Sincerely,B. SriRamDirector, Reliable Stocks and Shares(India)Ltd4B,Skylark Apartments,6,Rutland Gate FifthSt.,CHENNAI- 600006.Ph:044-42027089/42010221/28332373Mobile: +91 98400 63145____________________________________
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