Wednesday, January 4, 2012

Doomy

Finally! Finally Gross comes out with a doomy prediction, and I'm loving it.
The summary is that even 'New Normal' is going to be difficult because the people in 'power' are refraining from taking decisions. Things are going to be 'Ab', 'Para' or 'Sub' Normal. He talks of fat tails.. the one on the left is about deleveraging which would be good for the US because everyone would flock there. The one on the right is inflationary which would possibly steam roll most things in its way... He says that 2012 could be the year of a major financial upheaval.

The fundamental ideology is that one cannot keep funding debt with debt. Somewhere, this Ponzi scheme is going to stop. "It's only when the tide goes out that one realises who has been swimming naked."
I, however, believe that he has overlooked the China equation. It could well be that China will play a major role in pulling the tide away, the way it is done before the onset of a tsunami. Feel free to read my last two to three posts about China. 

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