The World is Upside Down!

It must be, since the IMF recommends Deflation for Greece. Until now, bankers and politicians were nice and snug together in the inflation bed for decades.

So, the question is: If the IMF and the European Commission demand deflation, does Greece have the political will to go along with it? Will the Greek Unions accept pay cuts? Will the pain of deflation and civil unrest trump the fear of default?

This could turn out to be a huge turning point in the history of the Great Recession. The debt transferred from private to public accounts is quickly becoming an unsustainable burden.

Michael Pettis makes a great point about China. One that I keep forgetting. The level of state control permits the government to prevent collapses and panics. However, they shift the cost from a short-term crash out over many years, even decades.

Soros is buying gold and calling for a devaluation of the British pound. Lots of credit out there compared to the amount of real money. Gold looks set to break out. I'm going to buy some bullion, and maybe some ABX, as they got a great deal on Cerro Casale. I might pick up 1-2% of Orezone as well, as management proved their competence in developing the last deal and selling it to IAG.