Raoul Pal: "It is the big RESET. From a timing perspective, I think 2012 and 2013 will usher in the end."
"The End Game: 2012 And 2013 Will Usher In The End" - The Scariest Presentation Ever?
Posted by Tyler Durden
Extreme? Well, Warren Mosler said something similar on December 2nd, 2011, in DC takeaway. (h/t Roger Erickson via email)
So from what I can see, there’s no chance that the ECB would fund and at the same time mandate the higher deficts needed for a recovery,In which case the only thing that will end the austerity is blood on the streets in sufficent quantity to trigger chaos and a change in governance.
We live in very unsettled times.
ReplyDeleteIf the EU crashes in a bad way, if the US embraces deficit reduction, if China falls hard, if Canada and Oz proceed with their austerity budgets, if the commodity bubble bursts and has a hard landing, if any of the above triggers another bank meltdown ... we could have a perfect storm.
Then again, governments may back off the austerity, China may have a soft landing, and perhaps no financial bubbles will burst just yet ... then we may continue to muddle along.
Right, if everything would come together it would be a global catastrophe.
ReplyDeleteNo one really knows how interconnected it all it. Clearly, TPTB never expected that Lehman bankruptcy would result in an immediate freeze up of the system and ongoing financial crisis and global economic contraction.
And the best we can probably hope for at this point is a relaxing of austerity enough to muddle along until the private debt is worked through.
MMT policy and deep write downs would be the least painful, but that is unlikely judging from past behavior.
Well if you listened to Plonker from the Fed the other day you'd imagine a European meltdown would be no biggie for the US ... a little like his boss thinking the sub-prime meltdown might be worth about $50bn, but smooth sailing from there.
ReplyDeleteI think the key here is not to talk in the 'ifs' in aggregate (all bad, all good, and what does that mean), but in the channels of contagion. We can only estimate this, for sure, but the ride from European defaults or break up (hey, weren't those ECB LTROs supposed to fix things?? Not) to bank failures, collateral problems, reduced global consumption, asset price deflation and so on is going to be so bumpy it's scary. The end game is what it means for the real economies of the world, something the Fed and other researchers and economists couldn't fathom a few years ago. They didn't even get that far.
apj
OMG, government might go bankrupt. D:
ReplyDeleteThese people remind me of those fainting goats who topple over in a panic whenever they're surprised.
OMG, a completely imaginary system of numbers created by humans might create a result that humans believe is scary!
What shall we ever do?
How about we just create more imaginary numbers, or change the imaginary game so the result isn't something that scares everyone and puts real people out of work?
But no, that might not benefit the 1000 richest people in the world. I guess we'll just have to doom our children to poverty instead.
ironically, those 1000 would benefit the most.
ReplyDeleteI'm under grace Tom, no repentance needed! ;)
ReplyDeleteRsp,
To believe all these dozens of articles and predictions of the end game that Tom has been posting lately, whether climate change, euro disaster, total economy meltdown or any of the others themes he has been focusing on, you have to have believe that democracy doesn't work and the institutions won't respond to voter demands. That people are too powerless and ignorant to change the course of events. While governments are clunky, people slow to engage, the system works and it does so in fits and starts. When people get pissed off, politicians quickly 'Find Jesus' and begin to lead the choir and sing 'hallelujah' from the top of their lungs.
ReplyDeleteThere is a happy medium between the extreme pessimism of the doom-sayers and the blithe optimism of the people people who say, "Well, we've made it this far, something is bound to turn up."
ReplyDeleteWe're trying to find that happy medium and assess the likelihood of events working out to hit it or hit somewhere on either side of it, for better of for worse.
Right now the likelihood seems to lie in the direction of undershoot.