This Time it’s Different?

Posted on April 25th, 2015 by admin in Investing, Political Economy, Tipping Points

The expert voices warning of the end of the global financial order are many and loud. The unstable and disaster-prone global economies are precolating along, until they hit a tipping point and then cause major money panic.

What’s different from previous crashes, e.g., Tech Bubble and Crash of 2008, is that so many experts are warning of disaster. Their warnings add to the overarching narrative, and possibly may serve as a force for stabilization….but not for long.

Here is a good eample of the clever warnings, from John Mauldin’s “Thoughts from the Frontline: Half a Bubble off Dead Center”:

A business-cycle recession is a fundamentally different thing than the end of a debt supercycle, such as much of Europe is tangling with, Japan will soon face, and the US can only avoid with concerted action in the next few years. A business-cycle recession can respond to monetary and fiscal policy in a more or less normal fashion; but if you are at the event horizon of a collapsing debt black hole, monetary and fiscal policy will no longer work the way they have in the past or in a manner that the models would predict, which is precisely what we’re seeing today.

Of course, the experts are 100% consistent in one thing: they never specify when the crash will occur!

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