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- In the spring of 2008, the wheel, the IMF wheel forecasted growth in the advanced market economies in 2009 would be 3.8%, and it came in at -3.7%, probably the biggest forecast error in history.
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- think of what ultra-easy monetary policy is doing to the behavior of the financial institutions.
- These guys have got to go for yield, because the basic business model, which is margins, the margins have been getting squeezed and squeezed and if you think it’s bad for the banks, think about the poor insurance companies and the pension funds, okay, who are already facing the big problems with demographics, okay? And now we’ve have added the squeeze of the margins too
...we’ve got all these zombie banks and these zombie companies, all sitting out there, in a certain sense excess productive capacity driving down the prices, maybe even inducing the Fed to ease still further, because the prices aren’t going up.
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- Problems anywhere are problems everywhere. And for those of you who think the financial system is invulnerable now because of the all of the effort Dodd Frank and blah, blah, blah, that’s gone into the post crisis reform agenda, I just put it to you, think again.
...And so the bottom line, I think is that debt deflation threatens because once these cumulative processes get started based on debt that’s the way the whole thing tends to work.
- And if the problems that we face are bigger than the ones that I think we faced in the past, our capacity to respond is now significantly reduced.
...as you sort of think your way through (the outcome I see) first the deflation and then maybe the inflation, is to also put a lot more emphasis on the geopolitical stuff, because increasingly, as George Friedman was saying yesterday, that’s where the action is going to be taking place.
...Rosie favors trading strategies (as do I) and longer-duration Treasury bonds and high dividend, high quality stocks. It’s a question of how you position.
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