History never repeats itself; but it often rhymes: Doom 'n Gloom vs Happy Pills

Thus starts a new book, Our Brave New World by Charles and Louis-Vincent Gave, on the new (yet again!) economy proclaiming that everything has changed and the old rules no longer apply. Specifically, that trade deficits don't matter anymore.

I chanced upon this from John Mauldin's weekly investors email, Thoughts from the Frontline, to which I have just recently subscribed. Mauldin compares this book with another, Empire of Debt by Bill Bonner and Addison Wiggin, which argues exactly the opposite, notably that the global accounts payable is coming due.

Being a superficial devotee of Santayana, and one who enjoys discovering patterns anywhere I can, I find it amusing that the Gaves chose that particular quote to start off a book denying the current rhyme is valid.

I haven't read either book yet, but if Gaves' prediction is to be true, it can only be because of the demand pressures from a superheated Chinese economy. But the Piper will have to be paid sometime, so if the rules have indeed changed, it can only be a temporary blip.

And when one considers the proportional ratio between duration of the "good times" with the severity of the correction, then hat does not bode well in my mind.

I give us two or three years top. I just pray the correction is only a correction...

(the quote is allegedly Mark Twain's)