I think the key here is everyone ultmately will go broke but in different stages and different times. Not like during the depression where only the men had jobs, when that was gone, kaput, game over. Now we have two breadwinner families, varying levels of resources before we die the death of a thousand cuts. It's not like we are going to wake up toghether and all be in the same sinking ship at the same time with only one option. Detroit sunk, everyone who had choices, made them and took them. Not like a whole city full of middle class banging on GM's door for a replacement job.
Not where I live. In fact many appear to be doing better than myself. But the comment mainly was pertaining to the fortitude of many Americans, who in my book make up what is known as "America", not to be confused with US gov't which is going broke and becoming increasingly paranoid and estranged from it's citizenry.
QE III is highly risky. If it fails, we go into depression....as our govt runs out of money and the American people disallow more debt to be taken on. If it succeeds, hyper inflation likely in 5 years....and that would make the gold bugs look good. In the former scenario, they're in bad shape. Gentlemen: place your bets NOW.
I got laughed at over the weekend when I said a military coup will probably happen in the US within 5 years. But it won't be 'planned' it will just happen, and the grunts will force the issue. Look, the politicians are out of control, and as stupid as they look, they can't actually be that stupid. This is why they've passed 2 important laws recently, the one about the Army being able to hold people without a trial and the kill switch for the internet. Both of these are designed to be used against the people when they start to rise up. If/When that happens the politicians will order the army to take control and crush the people. That job will fall to the grunts. But good old American patroitism will save the day and the grunts will refuse to fuck with their own countrymen and take their side. When that happens the Generals will soon realise who has the real power and take TOTAL CONTROL of Washington. The people will therefore win, and the governing classess will be in a whole load of trouble. The end to the story is the Military won't want to be in control so will hand back power to a new breed of politicians, ones which will actually help the American people. Laugh all you want, but something similar is coming.......
What do you mean QE can work? do you mean extend and pretend? The Debt/GDP ratio is enormously out of whack, extend and pretend will simply cause the ratio to go more out of whack, leading to a more violent reversion to the mean or hyperinflation. The current expected depression will already have a bigger effect on the economic statistics than in the 30's Depression. (the effect might seem smaller because we have technology they didn't had in the 30's) if you don't take the pain pill of a 30-year ponzi, now, it will go bigger by a multiplier. You don't want to take the pain of a 40-year ponzi, which is probably war.
I think recognizing, as denner clearly does, that 2008 is a continuing and unfolding situation is the key to understanding where we and the world are at. People talk about bubbles as if they are only about price increasing at a non-sustainable rate. Bubbles create opportunities for big, smart players to sweep vast sums off the table. Since it seems that everything is going so well they can pick their spots to simply steal trillions in the aggregate leaving big gaping holes that only governments and their central banks have the scale to fill. Since they cannot challenge their masters -- those that stole it all -- governments and their banks cannot deal with reality and simply accept that vast portions of society are bankrupt and must suffer through the reorganization that writes down (or off) the debt. At a certain point the instability created as much (or more) by the actions taken to prop things up as by the collapse itself move the considerations to things more resembling physics than economics. Pinpointing when the instability turns to utter chaos is not a precise science because the levers of power may be pulled in different ways and at varying intervals. That said my sense is that we are late in the fourth quarter. The only question I have is weather we have any time outs left. But what I do not question is the outcome of the game. My best guess is two years from now most of the world's population will go to bed fearful every night not knowing what the morning will bring. If you want to know how bad I think it can get see the movie Take Shelter. http://movies.nytimes.com/2011/09/3...ith-michael-shannon-and-jessica-chastain.html