McKinsey: You Won't Believe How Much Pain We're Still In For

The Business Insider ^ | 1-26-2010 | Gus Lubin

[blam]

McKinsey: You Won't Believe How Much Pain We're Still In For

Gus Lubin
Jan. 26, 2010, 11:46 AM

A new report by McKinsey Global Institute says that globally we have avoided the necessary deleverage process.

Governments like the U.S. have increased total leverage through deficit spending. Meanwhile, they boosted leverage in areas like housing through programs that promote spending.

In other words, we have delayed the deleverage process until some time right around now.

If we're lucky. Otherwise we're looking at this nasty option:

McKinsey: We therefore see a risk that the mature economies may remain highly leveraged for a prolonged period, which would create a fragile and potentially unstable economic outlook over the next five to ten years. They may then go through many years in which, all else being equal, GDP growth is slower than it would have been otherwise as debt is paid down.

In a series of charts, the global consulting firm spells out how we blew up the bubble...

And why it must pop >

[snip]

[unkus]

ping

[AndyJackson]

Predicting the obvious by one of the leading consultancy practices that made their bundle helping to leverage everyone into this mess in the first place.

[ClearCase_guy]

Who’s got the Hayek quote? Something about how delaying the inevitable only ensures that the pain which will come will be that much greater when it eventually arrives.

[Travis McGee]

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

~~Ludwig Von Mises

[SaraJohnson]

This is shocking news, blam. \s\

[Gondring]

Household deleveraging is difficult without a job.

[jnsun]

There is a way to avoid it, for the USA - develop internal energy like no tomorrow, fossil, nuclear, geothermal, renewable; and produce, produce, produce. Essentially Adam Smith's solution.

But that takes brutal competitive honesty within (like Affirmative Action Not), and opening of energy assets. And of course the Harvard, CFR, crowd are so arrogant, and self-projected, they can never let it happen.

The United States as a geoconstitutionally determined nation is potentially fine, like Canada, like Australia. But the global elite will do everything possible to obfuscate this - there were others who warned so.

National self sufficiency is not isolationism, just self improvement. It might also be called conservatism.

[RinaseaofDs]

Absolutely correct. He who has the fuel will make the rules. The Russians have certainly internalized this. Why we can’t is a testament to how idiotic the Stupid Party has become.

[gaijin]

We’re in some kind of historical time-warp:

1. Russia implodes, while America approaches the verge of a huge bubble.

2. America bubblizes, then implodes, becoming the new Russia. Meanwhile, China is in full bubble-mode.

Hypothetical:

3. China implodes, India approaches a bubble...?

[Ancesthntr]

Bascially, what McKinsey is saying is that “we’re phocked.”

Nothing that Karl Denninger http://market-ticker.org/ and a host of others haven’t been screaming about for years...and only now do these “geniuses” finally get it?

[griswold3]

mature economy and demographics...

Yes, we’re pucked...
30 years ago, during a severe downturn, we couldn’t buy a job so we started our own business. Now, all we want to do is hybernate and make it through the next 10 years.
The math never lies.