I was watching Bloomberg the other day. One economist talked about what he thought the future would bring in the next few months. He made a statement that was very in-depth and I thought I would share some of what I remember from his interview mixed with my thoughts. I don’t remember who it was because of the huge amount of information I read / watched every day about the economy. However, what he said remained with me, from all the information I took in the last few days. That’s why I wrote this article. However, credit is due to this person, whoever you are! I’ll put some of his direct quotes … in … um … quotes.
“Everyone is looking for an event like Lehmann” or a scandal that will simply kill the economy. I don’t believe we will see this happen. “What we see is more cancer than an event.” “Events have already happened. Obama was elected and we had Lehmann.” These were the sparks that led us to the fourth spin.
The cancer will spread slowly through several channels. The mortgage scandal with MBS is huge and will last 5 or more years. We will have currency devaluations, tariffs (trade wars), austerity and old political alliances that are falling slowly and painfully. There is no longer a “pull the sticker quickly” like Lehmann. Over the next 10 years, time will slow and the economic world will change for 98% of us.
So let’s stop looking for an event like the catastrophe of 29 or the election of 1932. We had some. Let’s look at the next phases of our economic cycle. Phases such as those mentioned above; currency wars, state budget cuts and tariff wars. In addition, I will look for more deflation. I am firmly in the deflation camp, but this is a discussion for another article.
I hope that helps, Jim Goulding