Desmond Lachman’s Doomsday Scenario


American Enterprise Institute Resident Fellow Desmond Lachman is an excellent forecaster and describer of economic trends and their likely consequences. I know Lachman has a reputation as a bear, but having had the privilege to meet him several times I can tell you he does not come across as a personality riven by bombast or paranoia.
That makes his latest article – appropriately titled “Lurking Dangers” – all the more scary.
After reading the first half of the article – which explains the risks to Europe and the euro posed by the recessions in Eastern European countries, Greece, and Ireland – it is depressing to read Lachman’s analysis of the looming commercial real estate crash and subsequent regional banking crisis that he foresees in the United States.
I’m not sure what to say other than this is really scary stuff – and that throwing incomprehensible amounts of money into Afghanistan makes even less sense given the risks to the global economy that Lachman lays out.
— Ben Katcher


7 comments on “Desmond Lachman’s Doomsday Scenario

  1. JohnH says:

    “Existential threat” used to be known as “crying wolf.”
    Panskeptic should question his assumptions about what having a nuclear Iran would mean. Let’s not forget that only one nation has ever used a nuke. And that nation was US.
    And why does panskeptic think that Iran is developing a nuke? Does it really have to do with Israel? Couldn’t it be that Iran has been under attack by US for the last 30 years and might need deterrence?
    But not to worry. Iran probably doesn’t need a nuke. Its deterrence lies in its ability to target Dimona and the world’s oil infrastructure, sitting conveniently across the Persian Gulf.


  2. DonS says:

    Panskeptic, I don’t mind thinking about the terrible possibility that the mideast oil pipeline might be disrupted by an Israeli attack on Iran. What I object to is the reflexive use (by some apologists) of the phrase “existential threat” to Israel which is a red herring designed to set up an a priori justification for an Israeli attack. Buying the meme makes an attack more, not less, probable. The dire potential financial consequences can be described without using the loaded shorthand, whether provocative or inadvertent.


  3. Panskeptic says:

    Don S, read today’s news about Iran’s secret work on nuclear triggers, and reexamine your assumptions. Realistically, the question of Israel’s continued existence remains an uncertainty, and is by no means the sole property of AEI, which I generally detest. The entire article is geopolitical speculation. Why not include this piece of the puzzle? Or do you just prefer not to think about it?


  4. JohnH says:

    When the next black swan strikes, I hope to be in insured CDs yielding 2%.


  5. DonS says:

    Interesting and informative article which I appreciated until I got to the notation of Iran’s nuclear program, which the author said could pose and “existential threat” to Israel. Why this bit of geopolitical speculation, realistically many years off — in the context of the next several years in financial speculation — should find it
    ‘s way into the article I don’t know. Except that Lachman comes from AEI and they are required to flog the meme. Anyway, I certainly appreciate the heads up, though what one is supposed to do to insulate oneself from the fallout of the multiple disaster scenarios God only knows.
    Clues??? Buy low, sell High? Swiss francs. Other bromides???


  6. JohnH says:

    This must explain why the stock market is hovering near 12 month highs! Or maybe it’s a result of the esteemed financial community gambling with 0% money the Fed is shoving down its throats.
    Thanks to Ben for bringing Lachman’s piece to our attention and for piercing the illusion of well being that Obama has sought to cast over the dire reality. Sadly, the Obama administration has yet to take the first step (honesty, not denial) of the 12 step recovery process.


  7. JamesL says:

    The downward ratchet in the graphic is simply the result of adding in the other things coming at America from just around the corner as a result of its own actions, or in many cases, inactions. The current Asian/mid-east wars and chaos, and the health care debate, and the economic crisis, though important, are fully ensconced as distractions to the suite of impediments that neither media nor congress wishes to try to juggle in the public eye. Success cannot be attained focusing on one buffalo when standing in front of an oncoming stampede. We face the suite, not any single component, and any coherent policy must address the suite.


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