a new investment-business paradigm will emerge this year or next; if for no other reason than that the old paradigms have vanished...
in spite of the ecb's continuation of its stupid policies ("we may lower rates next month" - WHY WAIT?), the global economy will reflate - steadily at first, then at an accelerated pace (see the skyrocketing bdi lately?)
over the last 5 months or so, the global financial system has been flooded with liquidity; it is slow to work - but this cannot last forever. there has been an aggressive effort to reflate.
i have significant doubts about how all this will play out over, say, the next decade, but i think it WILL work in the short run. market participants' creeping realization that their risk-taking activities are being heavily subsidized by taxpayer funds will no doubt cause them to embark on a buying spree of epic proportions, that will bring tears of joy to capitalists of every persuasion.
yes, we will suffer from a chronic bout of inflation as a result, but economic agents should and will view this as a worthwhile tradeoff for staving off a very nasty round of DEflation.
ultimately, will we learn any lessons from the white-knuckle ride we've endured in 2008/2009? no. we never do.
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