Slade: It may not be a classic bubble as you define it.

I think that it is the perfect storm, meaning that multiple failures compound, which is your point.

There was a housing bubble, a commodity bubble (copper is 1/2 what it was a year ago), which generated large revenues for governments creating bloated governments, there was the classic Keynesian overstimulation by the US borrowing the interest on it’s debt, and throw in reduced flexibility due to regulation, and we have a real problem.

Then throw in a generation of people who essentially have run the place all retiring, replaced by inexperienced and overqualified youth who will make the same mistakes their elders did but all at once.

And to mess it up even more, most western nations are facing crises of entitlements, where they need 4-5% growth in the economy to keep ahead.

I’m more pessimistic. 18 months, 2 years before it stops going down. Then a long stagnation. There are going to be cascading failures. Auto and housing are first, being big ticket finance driven. We will see a very large number of bankruptcies in the new year. Leveraged buyouts have stopped firms from failing; they were bought when weak. No leveraging to be had anymore, so firms will go under. I’m watching our customers with a gimlet eye, and expect some to disappear. Next is pension liabilities that will kill, already happening. Without returns, the regulators will force already cash strapped corps to pony up cash to top up their pension liabilities. Oops.

Then with severely reduced revenues, governments will be forced to do something. They will do something foolish, probably borrow or print money to create an inflationary cycle to reduce debt ratios. Or raise taxes. Count on stupidity, which will extend the mess another while.

We will see a number of countries default, and a larger number forced to devalue or cut costs because they can’t borrow. That may include the US if they intend to keep borrowing their way out of this mess.

Conspiracies require intelligence.

Derek