Hey davelj, on a more balanced note, thanks for creating this thread.
I’m a cautious optimist by nature, but my numbers are bigger (much bigger) than yours, and my outlook more pessimistic. Speaking as a former analyst on an MBS trading desk, the marked positions never matched the underlying long-term revenue streams. Patterns in ABS markets are observable in other markets.
The number in my mind is $70T. That’s the amount of global wealth that’s in the process of going away. I might be low. The true extent, performance and risk associated with the underlying economic activity has been overstated by innovations in FIRE. What remains of the real economy is contracting harshly from the wicked de-leveraging brought on by the systemic failures in FIRE industries.
The US federal government is putting us on the hook for about a GDP’s worth. Same with the other nation states. It’s a buffer, and it’s the right thing to do given the circumstances, which are indeed scary. There’s no other alternative. Getting food from the grocery store depends on it. I support massive public investment in infrastructure and our energy supply system. The Obama administration is aligned correctly for dealing with the crisis, in my view.
Long-term, I’m in the Soros/Rodgers camp, the US debt load is NOT manageable, and will change life as we know it. I predict a dollar crisis and massive inflation AND a depression. Bad times ahead. US will lose superpower status. Dollar will lose its status as reserve currency. Life will go on, but things will be different.
Opportunities to come? Energy and transition from oil to renewables. Economy will come back with the transition to rechargeable electric vehicles. Entirely plausible the US is not the center of gravity for this effort. (Detroit?) Again, many of the assumptions we make about life today will have fallen by the wayside by that point.
