In Focus

September 22, 2008

Thoughts on the current environment

n the last newsletter,we described the condition of “Fire and Ice” we saw developing: serious inflationary pressures building just at a time when real estate prices were crashing and substantial losses in the credit markets were coming to light. As the financial media typically has the attention span of a 10 year old boy on a sugar high, it is rare for a concept like this to have a durable shelf life of more than one quarter. Nonetheless, economic analyses and news pieces in the last several months have focused almost solely on this topic. The positions being taken seem to be far more polarizing than ever. “Fire” advocates are stridently warning of acceleration in global inflation - the underlying causes are obvious. Equally apparent to “Ice” supporters is impact of the debt crisis on the banking system, the struggling economy, and an over-levered consumer about to drown under the weight of higher costs that can’t be offset by higher wages or increased borrowings. (Click here for more....)