“Scenario 2: The main risk scenario (30% probability)
Stimulus fails, leading to continued asset price deflation and sustained contraction in the leading economies—a depression persisting for some years. The stubborn decline in global economic activity is punctuated by occasional rallies that are taken as signs of recovery, but these quickly fade as the underlying downward trend reasserts itself. The prominent role of governments in propping up banks and reviving domestic demand leads to strong political pressure for protectionism, effectively putting the process of globalization into reverse.”
I think we are seeing that now.
- The Dow tumbled 254.16, or 3.3 percent, to 7,522.02.
- We are effectively in a trade war with Mexico, soon to be in one with Canada.
- The Fed is printing money like crazy to try and stop deflation, to the detriment of the dollar.
- Now China wants a new international currency, something Turbo Tax Tim says is good…therefore it’s really really bad.
The good news is that everyone that wants to see Obama fail will see EPIC FAIL.
The bad news is he will take everyone down with him.