[from LBO #119, just posted to web]
Gloomy, w/ a 15% chance of depression
LBO has often described the U.S. economy by invoking the old Timex
watch slogan from the 1950s, “Takes a licking and keeps on ticking.”
Crash follows upon panic follows upon bust, and yet the thing keeps
getting up again to binge some more. These remarkable feats of
renewal, though, have always come with big help from the U.S.
government, either multibillion dollar bailouts or long rounds of
indulgent monetary policy from the Federal Reserve. But revive it
always has, despite the forecasts from the hard left and the hard
right that this time it was different and the medicine just won’t work.
Will it work again? Will the megadoses of stimulus do the trick? Or is
the jig up? Will what’s widely touted as the greatest financial crisis
since the 1930s be a prelude to Great Depression II?
As this is written, the punters on the Intrade betting site—who have
an uncanny history in predicting elections—are giving depression a 15%
probability. That seems about right. [Note added for web: the value of
the web contract soared in the weeks after these words were written.
As this note is added, the contract is at 53. That seems too high, but
you never know, do you?]
Backstory
Before proceeding, a little reminder of how we got to this sorry
pass....
rest:
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