Sign of Times

Here are a couple of quotes from Mish’s Global Economic Trend Analysis that portray where we are headed.

The first one is a quote from David Rosenberg at Merrill Lynch:

"There seems to be a lot of market chatter today about how the dramatic fiscal and monetary stimulus is going to reignite inflation. Let's get a grip. We have a real unemployment rate of nearly 16% and a capacity utilization rate that looks about to decline to 65%. There is simply too much spare capacity to absorb to be concerned about what the government is going to do except prevent an outright deflationary environment from taking hold."

 

And another one relates mainly to the US but with repercussions to the rest of the world:

No one wants to hear this but here it is without sugar coating: A long painful recovery process is in order. It may take a decade to play out. Lower home prices, lower prices on goods and services, and lower wages and benefits will all be a part of the recovery process.
In aggregate, the current generation now in high school is likely going to be the first generation in America's history with a lower standard of living than their parents for quite some time to come.

This, at the same time, may mean that the redistribution of wealth is in place. While developed countries feel it as deflation of wealth, most of the world will necessarily see it as inflation of wealth. With lots of spare industrial capacity out there, I believe this will lead to a higher standard of life, where many things will be possible. At the same time, all of them will lose on the scale of desirability. New trends will emerge later on to make up for it.