Todd Harrison: The Future Ain't Pretty

from Minyanville:
For some, it's a longing for simpler times when an assimilation of primary trading metrics allowed for honest pay after a long day. For others, it's an opportunity to unleash vitriolic criticism on anyone and anything associated with Wall Street. Pick a side or stand aside, people, the nation is dividing as we speak.
I believe history books may one day look back at Shock & Awe -- or perhaps, 9/11 -- as the beginning of World War III when it was broadcast on CNN.
I'm not talking about a nuclear winter; I'm simply saying the entire global dynamic seismically shifted towards that short stretch of time and the needle is now pointing in an entirely unfortunate direction.
Society acrimony to social unrest to geopolitical conflict; it's a tri-fecta that won't pay off for anyone.
I share these thoughts with genuine intentions. When I read stories about Goldman Sachs Group /quotes/comstock/13*!gs/quotes/nls/gs (GS 166.70, +0.26, +0.16%) employees arming themselves with pistols so they're equipped to defend against a populist uprising, I take notice.
When I see Ahmadinejad thumb his nose at the U.S and Russia -- and call out Israel, which already has an itchy trigger finger -- I take notice.
When benevolent gestures and philanthropic efforts are immediately met with suspicion and distrust, I take notice.
I view the world through a somewhat binary lens. On one side, there's painful yet inevitable debt destruction that will eventually lead to a prosperous outside-in globalization. That scenario requires lower asset classes, a higher dollar and a lot of patience. The U.S likely won't lead the world higher but that's all right; a little humility will go a mighty long way.
On the other side, there is more credit creation, more stress on the system and cumulative imbalances that are destined to manifest in a meaningful way. I'm not smart enough to know how or when, but the "why" is self-evident. When the next phase of crisis arrives, it will be one of confidence that could shake our socioeconomic construct to the core.
Harsh? Yeah, it is. Imminent? It doesn't feel that way, and corporate credit markets suggest it's not. Looming and ever-present? You betcha, and I'll again use the magic word: cumulative . As social mood and risk appetites shape financial markets, we would be wise to watch for the next progression of problems, be it sovereign defaults, state bankruptcies or commercial real estate.
There are, as always, two sides to every trade and the bullish bent is akin to a relay race; the government-sponsored euphoria handed the baton to corporate America (who rolled mountains of debt and issued tons of equity) and the transfer of risk will land in the lap of an unsuspecting public. Yes, the best-case scenario doesn't cure the underlying disease; it simply masks the systems and pushes risk further out on the time continuum, perhaps all the way to our children.
Know this; it's of no benefit to me or my business to communicate this view but I'll always give it to you straight, sometimes right, sometimes wrong and always honest. I offer these thoughts not only to open some eyes, but also to ask for help. As we're apt to say, if you're not a part of the solution, you're part of the problem and society is simply a sum of those parts.
Now, more than ever, we need proactive problem solvers as we edge ahead through this uncertain world.