The Worst Is Not Behind Us (Forbes Opinion). Professor Nouriel Roubini pronounces Doom on the world economy.
I am in one sense more optimistic. After all, Ben Bernanke was one of the foremost scholars on the Great Depression before he became financial advisor to the Bush administration and later chairman of the Federal Reserve. It must be an awesome experience for him - kind of like for a paleontologist to meet a live Tyrannosaurus Rex. He said already years ago that there are tools beyond zero interest rates, where Japan was trapped for about a decade. I agree with this. Unless politicians interfere in the work of the Central Bank (which admittedly is very much more likely now than a year ago), deflation can always be avoided. What I expect instead is what I call "shrinkflation" (I don't think it has an official name yet) in which prices increase at a moderate pace, while incomes and assets stay the same or shrink. There is nothing magical about that: It is a reversal of what we have seen in the last generation, and there was no name for it, except "business as usual". It was assumed that incomes would always be higher next years and assets would grow by themselves, kind of like trees.
But even if the value of assets should fall to half their peak price (an extreme value by any measure), there is no reason for harakiri. Things were like that in my lifetime and it was not Hell on Earth. It will just take a while getting used to, and finding a new balance in society.