Don’t Be Fooled

We are in a major recession, that could still turn into a depression.
A massive deflationary deleveraging is still going on.
Massive, massive losses have not yet been stated in public books – they will arrive.
These losses will cascade through the economy and bring up new unexpected looses elsewhere.
Corporate profits will plunge.
Asset prices will fall.
Industrial and consumer demand will fall.
The price of commodities will fall with them.

The point is that this crisis is the real deal.
And real deals don’t just go away.
They have to be dealt with.
This takes time.
And this is what is going on right now.

From my understanding of year to year accounting alone, not to speak of my understanding of Austrian Economics, I clearly see that this mess will go on into 2010 and beyond.

Now, unfortunately I do not believe that this crisis will bring about a better sounder world.
I believe the governments of the world are still strong enough to pull a number of rabbits out of their hats.
So we will see some stabilizing and then a new attempt at reaching a new economic “peak” of irrational exuberance built on a new wave of easy credit. This will go on for a decade or two and will result in a new, even more spectacular crash sometime say in 2020 or 2030.
What is really needed is a return to sound principles and sound money – but this is to much to ask today.
I am 37, will I see a return to sanity in my lifetime? Perhaps – but it will not be in the prime of my life, if it happens it will be late, towards the end of my life.

It is safe to assume that the madness will go on through our productive years.
Brace yourselves.

Hans J. Lysglimt

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