I actually agree that it hasn't gotten bad enough, but I think I have a different take on it than you. I liken it to the joke about the guy that falls off a 20 story building and as he passes the 15th floor, someone asks him "how's it going?". He responds, "So far, so good." And I think we really are at about the 15th floor, regarding the worldwide economy.
No, I actually agree. I think the long term trend is going to be a failure of the US as a consumer of last resort and a worldwide glut of supply leading to deflation and a contraction of the entire global economy. We're just not there yet and I expect it to unfold fairly slowly -- this could unfold over multiple business cycles in the US.
It looks like it's not just loonies like me who are predicting massive asset price declines.
New data from world money centers suggest the movement of money around the globe has simply ground to a halt, as institutions in the United States, Europe and Asia that are receiving taxpayer dollars from governments are socking it away to shore up their balance sheets, reserve against liabilities expected in the near future and sustain their unprofitable operations.
"Governments are not really trying to save the system anymore," said Satyajit Das, a banking expert in Sydney, Australia. "They now realize that's impossible. They are just trying to manage the decline."
As a result, once the current rally interlude is over, it's not hard to see the Dow Jones Industrial Average sinking to around 4,000 -- a level it last hit in 1995, before debt started to play such a large role in corporate and personal finance.
Comments
No, I actually agree. I think the long term trend is going to be a failure of the US as a consumer of last resort and a worldwide glut of supply leading to deflation and a contraction of the entire global economy. We're just not there yet and I expect it to unfold fairly slowly -- this could unfold over multiple business cycles in the US.
http://articles.moneycentral.msn.com/Investing/SuperModels/a-credit-crater-too-big-to-fill.aspx?page=2