Over at Whiskey Bar, the smart and tireless billmon has posted the first in what promises to be a series exploring the coming global economic crisis. In the first of the series, he reviews an article from Nouriel Roubini’s Global Economic Blog that discusses the Rashomon-like nature of our current situation; what’s happening is so complicated, so wide-ranging in its implications and diverse in its causes, that every economist who tells the story gives it a different plot, different heros and villains, and a different moral.
But, as billmon argues persuasively and knowledgably, it doesn’t matter who’s exactly right here; everything points to a coming crash, of massive proportions:
American consumers and the red-state yahoos currently running the U.S. government will almost certainly outborrow and outspend whatever line of credit our Asian financiers see fit to offer. You know we’ll keep pushing the outside of the envelope until we tear a great big hole in it – it’s the American way….
And when the dollar bubble finally bursts . . oh man. If you’ve ever heard the joke about the pig, the monkey and the cork, you have some idea what to expect. Which is why hopeful talk about a “soft landing� or a “smooth adjustment� makes me laugh. By now it should be obvious: We’re not going to stop until somebody or something makes us stop – just as a jumbo jet in vertical descent doesn’t stop until the ground makes it stop.
In concluding this first article, billmon says that “when this thing finally blows up, the yolk will definitely be on us – even if it’s the boys and girls at the Fed who end up wearing it all over their faces.” That raised, for me, a spectre that’s been haunting my dreams for some time now. In my comment to billmon’s article, I wrote:
I hope I’m wrong.
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