Friday, August 20, 2010

Are we headed into a depression? - Investment News

Are we headed into a depression? - Investment News: "Another deflation-depression component is a free fall of prices. Today, the storefronts of many retailers are covered with signs proclaiming huge sales. Home prices are falling, and most commodity prices have dropped.

On the bright side, price declines seem to be bottoming out. Nevertheless, collapsing prices are evidence of sinking demand and excess inventory. The slumping prices of collateral that supports most debt bring forth margin calls, which can further depress prices.

Falling prices also have a powerful psychological affect by delaying purchases. Even consumers who can afford to buy hold off because they come to believe that the same goods and services will be available tomorrow at lower prices"

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