Wednesday, January 28, 2009


Over at the Big Picture, there's an interesting post that looks at some pessimistic economic forecasts. The one that's the more optimistic (and realistic?) is the one from Merrill - but it's still bad. It says we are in a depression and it'll last until 2011. Basically, the views expressed are that anywhere from $6 to $15 trillion in debt has to leave the system before credit can work again.

If that's the case, probably all the government can do is provide a lifeline to the unemployed and businesses in distress, until the larger financal forces are played out.


Credit is based upon future wealth creation, to pay off the interest and the debt itself; and then to leave a profit once costs are subtracted. Where does wealth come from? Even Wall Street must now know it's not from their paper transactions. In the physical sense, the one that ultimately matters, wealth comes from the earth's resources. Oil has peaked; oil is the critical resource to make the economy to grow again.

The analyses you link to may not know these connections or they may be buying time. No one wants to announce the end of credit and economic growth as we've known them.

By Anonymous Anonymous, at 1/28/2009 12:04 PM  

Post a Comment