ALBERT EDWARDS: The Party Is Over, The US Is Just One Recession Away From Japan-Style Doom
Over the last 15 years most investors have refused to contemplate that events in the West are playing out in a similar fashion to Japan in the 1990s. But the latest inflation data out of both the US and eurozone should ram home the fact that we are now only one short recession away from Japanese-style outright deflation. Similarly, investors refuse to believe that equities can fall in an environment of rampant QE. They are wrong.
Basically, we’re so close to deflation, that all it will take is another downturn, and we’ll be toast.
In their effort to deny Obama any political vistories, as witnessed by Senator Pat Toomey’s admission that that was one of the biggest reasons the latest attempt to close the loopholes in the law requiring background checks failed in the US Senate, the Republicans have prevented the “re-inflation” of the US Economy after the Financial meltdown in the last decade. The stimulus of US Federal Government spending that was present for the last 3 big recessions, Bush-Bush-Reagan, is widely known to, not only be absent after this the “Great Recession” but the Republicans have used their control of the House to impose austerity. Even though, austerity has been debunked on both theoretical and as well as empirical grounds.