Wednesday, December 3, 2008

Some cogent analysis (not from me)

The MSM has finally come to the realization that this recession is going to be a little worse than they expected, but the blogs are still the place for solid analysis. I recommend two posts that Mish put up today...






Unfortunately, in the long-term, every one of Paulson and Bernanke's current interventions will make this recession that much worse. And the size of these interventions suggests the effect could be long-term catastrophic.


Here is some perspective (emailed to me)...


Aztec, I am hoping to get a reply to your earlier arguments posted soon.


5 comments:

Al Powell said...

I generally like Mish, but he's playing in the California Penile League here. He says, "For the sake of argument, let's define depression as unemployment of 10% or greater." I don't think anyone would agree with that definition of "depression." In the Great Depression, unemployment was as high as 20-25%. European unemployment is regularly in the 10% range, and nobody calls it a "depression." I've heard "depression" defined as 10% annualized GDP contraction, but that's an entirely different metric altogether. I think he is looking to use the "D" word as an alarmist tactic to drive traffic to his blog and, frankly, it's irresponsible. Mish, you can do--and have done--better.

Restless Native said...

Who is this Mish-person? Post on this site, to establish your bona fides. Anyone who doesn't is of little consequence. We have Friedmanite. We have Anonymous (com hither young flower, come hither) and Dick Bold.

Let this so-called Mish get involved and then I'll consider his point(s) of view.

Ta-dao.

GammaBoy said...

Al,

I completely agree with you on the 10% threshold, but it also a case of comparing apples to oranges. There was no welfare, no food stamps, no disability etc. in 1930. The definition of unemployment was much more straightforward then it is today.

As for Mish needing to drive traffic, I don't see that as a reason. He gets plenty of it already, and if there is a "D" word that he has been using over and over, it's deflation, not depression. He's called that pretty well, although I don't expect that to last.

Al Powell said...

GB - You don't think deflation will last long? The model I look at is Japan in the 1990's, an extended negative feedback loop that was virtually impossible to get out of. Because of the Fed printing so much money?

GammaBoy said...

Al,

I don't know. The japan model might be right, but since they were a net creditor country where we are a net debtor, I have a sense the japan model isn't a good fit. Certainly from a national strategy perspective, if we are in debt to everyone, inflation would fix that. I still think there will be a currency crisis of some sort next year, but with so many distortions coming from the gov, I find it very difficult to sort out what happens.

In true deflation, cash is king. That is certainly the case now but personally I will be moving my cash to other assets in the coming months.