This time around though there is "help" from another source. It is not the type of "help" we all hope for but it is there nonetheless. We will never have to admit that we are in a recession because by the time we finally capitulate, we will be in a deep depression. That is right folks, we are entering a depression. Take it from George Soros for confirmation. He said as much in testimony to Congress today.
Since most of us are not old enough to remember a real depression, we can all be a little aloof or smug about it. It sounds bad, but it is hard to imagine that things will really get that bad now. Surely things will get better soon. Maybe Obama will save us?
I suspect "reported" unemployment may go as high as 12-15%. The real unemployment will be more like 20-25%. I also think the risk of deflation is now very high. An informal sort of deflation is already happening and luxury goods are routinely sold for 20-30% less than "manufacturer's suggested retail prices," or MSRP.
The WSJ had an article today highlighting this phenomenon. It had an upbeat title announcing bargains to be had. But pretty soon those $80 designer jeans (down from $200+ MSRP) will remain on racks.
The poor can't afford them, pretty soon the middle class won't want to spend this much either, and the rich will have to "hide" lest they become victims of jean-jacking.
On another note, George W. went on record defending free trade. There, now you know free trade is in trouble. Once George W. has to take up its cause, the end is near. The free market is now on par with success in Iraq. We're turning the corner folks. Just hold on for a while longer.
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