Janus faced policy – Debt deflation AND Bubble inflation

Well here go! Remember that lift I mentioned before. Well is it just me, or can you feel that safety break slipping.

The Pru’s deal with AIG is lost. They thought it might be their asian cash cow. I think they would have been disasterously wrong. So did their share holders apparently. So now Uncle Sam had better get on that red phone to the caped bailer – Turbo Timmy. 1% down at the bell. Like the great and mythic white whale, Moby Dick, AIG is on an unalterable course – “Swerve me? The path to my fixed purpose is laid with iron rails, whereon my soul is grooved to run.”

China growth is down. So that’s an expresso coronary for all the China property speculators. Australia had really better pull their finger out and decide where they are going to turn – tax the miners or stick with the devil you know – take another toke on that property bubble.

There is a commodities bubble, which, if the spot market keeps rising at the insane levels it has been, could lead to some collpases of those with long contracts. I think there could be some iron and coal prioce hedging that is about to go frantically wrong for a few players.

And BP is going to knock shares sideways for a while yet.

We now officially dealing with the consequences of our earlier idiocy. We could have forced those who are sitting on bad debts and toxic loans to begin to empty their trousers. But we didn’t. Instead we allowed them to sit on all that shit like it was going to somehow turn into a nest egg.

So now we have to acheive two almost completely different opposed ends: Debt deflation AND growth of an oder that can only realistically come from bubble growth. And that I think is exaclty what our lords and masters have told our politician to attempt.

Force contraction upon all those too weak to resist. That is, all the countries in no position to argue, like Greece, Portugal Italy and Spain. Italy’s CDS has started to bump up already. Spain’s banks are sitting down thinking its over. Sorry! this is just the break between rounds boys. Bakc on your feet, guard up and good luck!

The we will have to give the big boys of the financial sector whatever rope they need to grow as fast as they can. Which will mean holding off any regualtion, and stand by for some bond speculation, property bubbles and commodity speculation as well.

The banks are going to need liquidity. So expect conflicting pressures upon both the FED and the ECB. Bond players to want less of it. Banks to want more. Eithert way regulation is a joke. Watch it wither. Debt is now out of hand. IOrganic growth is just NOT going to be enough. That is already clear in every pronouncement about downgrades due to weak growth. The medicine is going to be cuts in everything, especially wages and pemnsions combined with whatever speculative prfiteering will give that psecial synth-pop 90’s growth factor.

We now want deflation of debt and infaltion of liquidity, risk and bubble profits. Stupid? check. Dangerous? Double check. Going to happen – you bet.

The horrid problem is that this kind of synth-growth in numbers in a bank ledger is what it was before the bust. SYnthetic and prone to disappear even faster than it was created. Real suffering – buying false profits. That’s the Genius policy corner we have been hearded into.