Bill McBride — "Disinflation, Here We Come"

Price of oil dropping and global economy turning over, with the EZ and China fanning the downdraft.

Calculated Risk
"Disinflation, Here We Come"
Bill McBride

Zero Hedge — David Rosenberg On "Shared Sacrifice"

David Rosenberg's analysis of the effect of austerity on aggregate demand, economic prospects under "disinflation," and the resulting effect on asset values. He gets that increased saving-deleveraging will be contractionary.

He thinks that "shared sacrifice," his euphemism for austerity, is needed to right the ship, so we had better get used to a new economy that won't look much like the one people have grown accustomed to. But there will be a lot less debt public and private, so the sacrifice will be worth it, he thinks. 

I would say that if this transpires as he foresees, we won't have a "disinflationary" situation but a deflationary one, as private debt crashes globally. I think that there is a lot in the scenario that Rosenberg either leaves out or just doesn't foresee looming. This would not be just some "belt-tightening" that the economy can live with.

Zero Hedge
David Rosenberg On "Shared Sacrifice"
From David Rosenberg of Gluskin Sheff