I was looking at Bloomberg the other day. An economist was talking about what he thought the future would bring in the next few months. He made a statement that was very profound and I thought I’d share some of what I remember from interviewing him mixed in with my thoughts. I don’t remember who he was due to the huge amount of information I read/see every day about the economy. However, what he said stayed with me, from all the information he had received during the previous days. That is why I wrote this article. However, credit is due to this person, whoever you are! I’ll put some of the direct quotes from him… in… um… quotes.
“Everyone is looking for an event, like Lehman” or a scandal that will simply kill the economy. I don’t think we’ll see that happen. “What we are seeing is more of a cancer than a single event.” “The facts have already happened. Obama was elected and we had Lehman.” Those were the sparks that led us to turn four.
The cancer will slowly spread through various channels. The MBS mortgage scandal is massive and will continue for 5 years or more. We will have currency devaluations, tariffs (trade wars), austerity, and old political alliances slowly and painfully falling apart. There is no more ‘quick band-aid’ like Lehman. In the next 10 years, time will slow down and the economic world will change for 98% of us.
So let’s stop looking for an event like the crash of ’29 or the 1932 election. We had those. Let’s look to the next phases of our business cycle. Phases such as those mentioned above; currency wars, government budget cuts and tariff wars. Also, I’ll look for more deflation. I’m firmly in the deflation camp though, that’s a discussion for another article.
Hope this helps, Jim Goulding
