This is a tale of two cities, one which is filled by thos with gobs of cash and those that aint got it; the two worlds meet in terms of more low wage jobs in cottage industry-scale downs, and the services that are needed are more and more fragmented, thus no real recession crash, just fragmentation offset by higher costs, higher oil, higher food distribution costs and off course greater demand from global consumption which decreases supplies and bumps up the local prices.

End result, everything costs more, growth slows in a traditional sense, because there is no future growth industry to fuel, there is no next big thing, like software engineering, or cars, or walmarts and bigboxmania, no housing bubble building booms, no stock bubbles, just flatline———- zip, low interest rates from The Fed cuts, which will mirror Japans recession race to zero, connected to no one saving a dime, because the average Joe has increasing debt……. etc…

Stagflation, stagflation, stagflation!

Happy new year!

re: Edinburgh trained optimist, Tony Jackson’s piece. He was spot-on in recognizing problems. His insight was in spite of a couple of questionable assumptions:
1)”financial markets are discounting mechanisms and (2) forecasts are implicit in prices”

It seems just as often financial markets are ‘compounding’ mechanisms.

In “(Mis)Behavior of Markets” by Mandelbrot and Taleb’s “Black Swan” the efficient market hypothesis was pretty much destroyed.

After the obligatory paeon to Efficient Market Hypothesis, he nailed reality. “hedge funds are inadequate insurers of risk.”

My rationale is:

1) Improvements in the diets of emerging economies.

2) Increased use of corn for ethanol.

3) Drought caused crop reductions.

My overall prediction is deflation in finanical assets and inflation in commodities, especially food and energy. The net result will be stagflation in the US.

Have a Happy and Cautious New Year!!