Comments on: The next crisis is already under way http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Anonymous http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57382 Anonymous Wed, 21 Oct 2009 09:21:00 +0000 http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57382 "The question is: where does this all lead? Munchau asks this question at the end of his post and suggests that “there may not be a safe way down.”.." Taleb and Buiter are getting close in the way they are looking to equity rather than debt. I concur. We need a debt/equity swap on a national and international scale, and this actually means a new take on the legal and financial structures we take for granted - ie a reinvention of conventional Debt and Equity. This lecture in Ireland http://www.slideshare.net/ChrisJCook/equity-shares-a-solution-to-the-credit-crash-presentation outlined what might be done with the prime (or sub-prime) culprit - property - to go from a deficit-based but land-backed economy, to one which is land-based. The future could lie in most of the National Debt - a ludicrous accounting concoction - being replaced by a National Equity. Great blog, by the way. A 'must read'. “The question is: where does this all lead? Munchau asks this question at the end of his post and suggests that “there may not be a safe way down.”..”

Taleb and Buiter are getting close in the way they are looking to equity rather than debt.

I concur. We need a debt/equity swap on a national and international scale, and this actually means a new take on the legal and financial structures we take for granted – ie a reinvention of conventional Debt and Equity.

This lecture in Ireland

http://www.slideshare.net/ChrisJCook/equity-shares-a-solution-to-the-credit-crash-presentation

outlined what might be done with the prime (or sub-prime) culprit – property – to go from a deficit-based but land-backed economy, to one which is land-based.

The future could lie in most of the National Debt – a ludicrous accounting concoction – being replaced by a National Equity.

Great blog, by the way. A ‘must read’.

]]> By: Mark G. http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57374 Mark G. Tue, 20 Oct 2009 16:06:00 +0000 http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57374 Imagine how a rush into the U$D would change global dynamics over night. Imagine how a rush into the U$D would change global dynamics over night.

]]> By: Anonymous http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57367 Anonymous Tue, 20 Oct 2009 04:23:00 +0000 http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57367 The two outcomes (No policy traction and Start-Stop economy) summarize the situation very well in my opinion. Chances that we stay in a golidlocks environment (that the market believes we are in now) are pretty much 0%. Someone has pointed out that valuations (PE's for stocks for instance) follow economic volatility, which could be proxied by the volatility of CPI. On that basis (especially in outcome 2), it's fair to expect much lower multiples (no matter what the earnings). Timing is as always an issue, but investors with 6+ month horizon can safely go short... Good Luck! The two outcomes (No policy traction and Start-Stop economy) summarize the situation very well in my opinion. Chances that we stay in a golidlocks environment (that the market believes we are in now) are pretty much 0%.

Someone has pointed out that valuations (PE’s for stocks for instance) follow economic volatility, which could be proxied by the volatility of CPI. On that basis (especially in outcome 2), it’s fair to expect much lower multiples (no matter what the earnings).

Timing is as always an issue, but investors with 6+ month horizon can safely go short…

Good Luck!

]]> By: LavrentiBeria http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57365 LavrentiBeria Tue, 20 Oct 2009 03:55:00 +0000 http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57365 Let's accept your main thesis as precient: That we're in a cyclical reinflation contextualized by a secular deflation. Not wishing to be trite, but when is it that the wheels come off again? Let’s accept your main thesis as precient: That we’re in a cyclical reinflation contextualized by a secular deflation. Not wishing to be trite, but when is it that the wheels come off again?

]]> By: Rahul Deodhar http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57364 Rahul Deodhar Tue, 20 Oct 2009 03:39:00 +0000 http://www.creditwritedowns.com/2009/10/the-next-crisis-is-already-under-way.html#comment-57364 Fantastic post! I would love to hear your views on global impact of this. The sages of CNBC believe implicitly in decoupling. There is a move to invest into China and India given that long term US does not seem reasonable. On one hand they talk of dollar devaluation and other hand bet on assets in developing world currencies. ALL central banks are focusing on asset prices! That, to my mind, is ridiculous. I mean asset price is one input - sadly it appears that it is now the only input. If US exhibits the start-stop patterns you say then they will have to ride the cycles. Ultimate currency turmoil will lead to deflation in developing countries (BRIC). What I think central banks need to focus on real job creation (real =non-government entrepreneur driven). these are the wheels that will move the country. real jobs across income classes will help get debt out of the system. The only solution central banks see is lower interest rates. And guess what it leads to: MORE debt!!! Further, don't you think this will lead us to income polarization? Are the class wars and bread-vs-cake days back? Fantastic post!

I would love to hear your views on global impact of this.

The sages of CNBC believe implicitly in decoupling. There is a move to invest into China and India given that long term US does not seem reasonable. On one hand they talk of dollar devaluation and other hand bet on assets in developing world currencies.

ALL central banks are focusing on asset prices! That, to my mind, is ridiculous. I mean asset price is one input – sadly it appears that it is now the only input.

If US exhibits the start-stop patterns you say then they will have to ride the cycles. Ultimate currency turmoil will lead to deflation in developing countries (BRIC).

What I think central banks need to focus on real job creation (real =non-government entrepreneur driven). these are the wheels that will move the country. real jobs across income classes will help get debt out of the system. The only solution central banks see is lower interest rates. And guess what it leads to: MORE debt!!!

Further, don’t you think this will lead us to income polarization? Are the class wars and bread-vs-cake days back?

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