The entire thrust of the "recovery" efforts of both the central bank and the government is completely misplaced, in our view. This thrust is to: return the American consumer to ACCUMULATING MORE DEBT AND RETURNING TO THE HALLOWED PRACTICE OF SPENDING LIKE A DRUNKEN SAILOR. We expect more of the same under the new Administration. IF -- and is is a very, very BIG IF -- this strategy "succeeds," it will avert for a BRIEF PERIOD the day of reckoning, in all of its fullness. BRIEF being the operative word. However, we do not think it will work, firstly, because of market interposition, and, secondly, because the American consumer is traumatized, and this trauma is finally beginning to wake him up to the UNCHANGING -- and UNCHANGEABLE -- facts of life. The prerequisite for a TRUE RECOVERY is precisely that which it has always been subsequent to the collapse of the preceding speculative mania and over-leveraging: to wit, LIQUIDATION. Without LIQUIDATION, there can be NO REAL RECOVERY. Moneysage 2008 - copyright |
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