The Two-Track Economy Arrives: "
So now it’s all about whether you are a preferred client of Goldman Sachs or another big finance house.
If you’re on the inside track, this is a great time to buy U.S. assets that are being dumped by people without access to cheap credit, or assets overseas (e.g., Asia, where the “carry” or interest rate differential relative to the Federal Reserve is already positive and the exchange rate risk is all upside).
If you’re on the outside track, you are experiencing a version of Naomi Klein’s “Shock Doctrine.” Some (former) members of the elite are in this category--this is another standard feature of emerging market crises and “recoveries.” But mostly, of course, it’s nonelite on the outside track and a more concentrated, reconfigured version of the elite on the inside.
This can lead to short-term growth--the speed of recovery in many emerging markets surprises many, from about 12 months after the crisis breaks. But it also leads to repeated crisis, to derailed growth, and to a loss of income, status, and prospects for most of society."
(Via The Plank.)
