![]() Poland and other central European countries have emerged from the crisis in decent shape. Other areas of the world are doing better too. Brazil’s minor stagflation today is nothing compared to the currency crisis they were fighting in the late 90s. Chile continues to grow steadily as it has for years. Colombia and Peru were basket cases back then and are now booming. Latin America, if anything, as a whole looks to be in better shape now than it did in the 90s. Stock markets are booming, credit is easy and conspicuous consumption continues despite some growth hiccups. In fact, in some areas, Asia looks a lot like it did back in the 90s before the crisis. Asia continues to hum along despite the Chinese slowdown. Here in the US, we are running massive deficits, taxes are rising, the Fed is buying bonds as fast as the Treasury can issue them, the regulatory environment is hostile (and ineffective at the same time quite a trick) and President Obama is doing his level best to prove Bill Clinton wrong about the era of big government.Īnd yet….Europe wasn’t exactly booming in the 90s either so maybe that doesn’t matter all that much. Australia and Canada have stalled out with the slowdown in China. Europe is in recession, China’s growth rate has slowed considerably and Brazil is suffering through a bout of stagflation. The global economy is not exactly humming right now and economic policy is a mess. I have to admit it is hard for me to see how that could be the case. ![]() Has Goldilocks returned for another bowl of perfect porridge? Well, it might come as a bit of a surprise, but those three conditions are in place right now. In retrospect, it is obvious now that Goldilocks’ last name was Minsky but we didn’t know that at the time and it was sure great while it lasted. It was the “Goldilocks” period of US growth and inflation – not too hot, not too cold. In case you’ve forgotten – and it has been a very long time – those are the conditions that prevailed from about 1995 to early 2000. Those three conditions – sustained – would indicate that the market is anticipating better growth and lower inflation. Once upon a time in a commentary long, long ago I said that we’d know the US economy was on the right track when we saw three conditions simultaneously: rising stocks, a rising dollar and a falling gold price.
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