Pretzel Logic

This Recession Will Be Anything but Deep

There are a few things missing here in the inflation/deflation argument:

1) We are destroying credit, which is deflationary. Much of the money supply is credit and/or leverage. It is imaginary, not "real" money supply. As a result, money is being destroyed faster than it is being created.

2) We already HAD the rabid inflation people were predicting years ago. In case you missed it: oil was trading around $150 bbl, gold was north of $1000/oz., etc., ad infinitum.

3) We have never had inflation during a falling housing market.

4) We have passed a psychological threshold where banks, people, and businesses no longer view "easy credit" as desirable. Gov't can't reinflate that balloon right now, there are too many holes in it.

My personal opinion is that we get strong deflation for a while as the deleveraging and credit destruction continues. Once that unwinds fully, we will finally see inflation again.

Eurozone Divided By Banking Crisis

I'm of the opinion that the EU collapses before this is all over. There are too many divergent interests for this not to happen. The Euro was a great currency for beautiful days when the sun was shining, but now that the floods have come, I think the foundation will be washed away.

Market Predictions: 'Crazy' About the Dollar

MarkMedayski,

I'm sorry you resent America so much.

Instead of wishing us catastrophy, you should be praying our economy holds up so we can continue to have the only military on the planet capable of protecting Europe from a resurgent Russian bear.

You should probably be a little nicer to us, too, since we may eventually have to save your precious little EU from becoming an annex of Russia. How much do you think the Euro would be worth THEN?

Regards,

The Capitalists