Some Pain is Necessary
I have been banging on this drum ad nausem (see previous blogs below). With regard to the precarious global economic situation at hand, there are two possible outcomes, one good (in which the asset bubbles get deflated); the other very bad (systemic collapse and global depression).
Suffering asset deflation pains, shaking out a few weak hands, and scraping away the ashes of toasted speculators who were greedy and overleveraged to start with, will be a walk in the park compared to a global depression. Better hope the economy really does pick up and corporations step up to the plate and deliver. The quote below provides some validation for the not so pretty scenario.
"Our long-held conviction that the economy can't sustain rapidly rising interest rates remains intact. The main reason for this is the sheer amount of debt in the system and the average consumer's undesirable financial situation ... if the economy starts showing signs of weakness, then the question begins whether the Fed will continue tightening monetary policy. If it stops and we try again to artificially induce growth, then excessive speculation will remain the only game in town, eventually leading to a spectacular collapse of the financial system."
-Elliot Gue, Ivan Martchev and Yiannis Mostrous, Wall Street Winners
Uncle Al's Conundrum Part IV
Uncle Al's Conundrum Part III
Uncle Al's Conundrum Part II
Uncle Al's Conundrum Part I
Inflationist Hedging
Suffering asset deflation pains, shaking out a few weak hands, and scraping away the ashes of toasted speculators who were greedy and overleveraged to start with, will be a walk in the park compared to a global depression. Better hope the economy really does pick up and corporations step up to the plate and deliver. The quote below provides some validation for the not so pretty scenario.
"Our long-held conviction that the economy can't sustain rapidly rising interest rates remains intact. The main reason for this is the sheer amount of debt in the system and the average consumer's undesirable financial situation ... if the economy starts showing signs of weakness, then the question begins whether the Fed will continue tightening monetary policy. If it stops and we try again to artificially induce growth, then excessive speculation will remain the only game in town, eventually leading to a spectacular collapse of the financial system."
-Elliot Gue, Ivan Martchev and Yiannis Mostrous, Wall Street Winners
Uncle Al's Conundrum Part IV
Uncle Al's Conundrum Part III
Uncle Al's Conundrum Part II
Uncle Al's Conundrum Part I
Inflationist Hedging
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