It is becoming very clear to me that deflation will be the major problem facing all of us going forward.
The problem is of course over capacity in every type of service or product known to man.
The end result of the credit bubble is not just a property crash,but a deflationary crash of all asset classes.
Small business will be crushed in a deflationary environment.
It is already happening in the retail sector.
Clive Peters had its share price crunched by 50% this week after reporting terrible sales figures.
All the retailers are struggling from Woolworths thru to Supercheap.
We have so many retailers it amazes me how they all manage to survive.
We have shopping centres/strips every 5 klm,all selling the same stuff.
The frivolous businesses will also really start to struggle in this new deflationary environment.
I suspect we will see many of the second tier retailers go broke this year.
I also think that most all frivolous businesses like Personal trainers thru to Candle shops will go the way of the DoDo.
If you think of all the useless businesses and services out there that folks can do without, if folks are struggling to pay the mortgage,rent or electricity,what hope these businesses?
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