When the world is over leverage - it need to deleverage
When assets price is inflated by easy money - it need to deflate
When resources is misallocated for a long time - it will go under depression
When the assets bubble reach its peak - it need crash
When share markets goes too high due to US carry trade - it need to collapse
The world has been printing lots of money over the last 3 years, USA, Europe, China, Japan, Asia Pacific, Australia etc. The consequence is boom and then bust.
Leverage
Rule number one business is not to over leverage. One you overleverage, you don't leverage more to pay for you old leverage. You need to deleverage. World leverage gone crazy over the last decade, especially, last two years.
Assets inflated
Look at oil, gold and silver and stocks and soft commodities. All reach new highs, on what grown, the problem in 2007/8. Common sense tell us that the world has too much debt, when you reduce interest to zero and start the stimulus programs, you know that these are not the solution, these are ways to defer the TRUTH, i.e. major deflation
Allocation of resources
USA is over consume
China over produce and over construct
Euro/US have too much derivatives
Brics is over produce for China, who overbuild and over construct
Properties around the world is over inflated by easy money
Commodities overplayed by US carry trade
Banks is bankrupted and continue to be given cheap money to gamble
Any major misallocation of resources over a long period will go through depression
MyView
Scary isn't it. Damn if you do and damn if you don't.
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