Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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From: andiron	6/13/2009 4:49:11 PM
	of 116555

It appears that many now contend that the world just escaped the depression/economic hurricane by QE/fiscal deficits etc. But that would be too simple an outcome for an Armageddon due to causes in effect for well over quarter of a century. So what does a realist to make of all these? Financial markets are up in a tizzy, bond market behaving gentlemanly and credit spreads like libors and OIS spreads are showing business as usual signs!.. It appears to me that this is where the test begins as asset inflation (not wage, a la 2007)picks up in earnest forcing the CBs around the world onto defense. Developed economies are wallopped even further as energy/material inflation saps the consumers w/ net declining wages leading to loud protests against extra loose policy of the Fed. A dilemma would beckon as the Fed dithers aware of the disastrous consequences of premature tightening in the 30s. But the choice will not be theirs to make. That course of action will decide how the world will witness the final bloody chapter of this financial Armegeddon: Hyperinflation or Deflation. Perhaps, by 2011-12. bloomberg.com

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