1. Yes, think the consumer is the story, but it's two stories. There's been a big loot or shift in wealth. The top quintile (Bullies) now constitutes 40% (at least) of consumer spending, and they've held it together. But the Bullies can't fade at all to keep things going. Plus the defaults coming from the other 80% are going to create a credit and financial crisis. If the Fed starts printing money hard to prevent it, we will get an unmitigated inflationary bust, and generation long crisis. If they act somewhat responsibly we will get mostly a classic credit bust.
2. No acceleration possible
3. Only the Bully and Pig Man class can obtain much new money in the current order, and mostly through loots and speculation. Same process we've seen all year, but that's running it's course. I can't believe credit will be extended too much longer to many of the others. The key to that are the FCBs willingness to support a sinking ship.
Actually the longer Bully/Pig Man wild man run continues, the worse for Brazil Americans. I think once the Pig Man Bubble fizzles, Brazil Americans will get some welcome and beneficial deflation on costs, as long as the Fed doesn't print. Once the maladjusted Bubble jobs are washed out, the economy can then rehire towards productive enterprises, based on balanced consumption, and actual economic signals, rather than distorted ones.
If they print to bail out Bullies though, look out! That's what I fear.
4. It's not new money, but it's mobilized and used differently. That's the risk, financial assets get mobilized into a Flucht in die Sachwerte of sorts.
5. Don't think much of the receding housing and credit Bubble can be replaced. There will be a Depression. It will either be a cleansing (a decade), or a disasterous bailout attempt will be attempted that causes irreparable multi decade damage.
6. absolutely correct
7 Asset inflation can morph into other inflation as I explained in the previous post.
8. Probably the other way around. The Pig Man phony shuffle conomy bust will actually work to help the real economy get adjusted and eventually healthier, although painfully. Capital will get allocated more correctly. |
