Daily commentary: On panic, retrenchment and deleveraging

The Martin Wolf piece about panic becoming all too rational fits very nicely with the macro case i made earlier today. He points to the private sector indebtedness and subsequent retrenchment as well as to the policy errors that have come from leaders not being able to change tack quickly enough to deal with the events on the ground. I have to say, I wasn't left feeling optimistic by reading his piece, It gave me more a sense of inevitability about the next down leg.

He writes:

Finance plays a central role in crises, generating euphoria, over-spending and excessive leverage on the way up and panic, retrenchment and deleveraging on the way down. Doubts about the stability of finance depend on the perceived solvency of debtors. Such doubts reached a peak in late 2008, wh...

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