Economic Zugzwang is when there are no winning economic moves.
Here is the diagram in chess terms.
An economic recap follows.
Trébuchet
Whoever has to move loses. It’s Bernanke’s move.
Major Economic Zugzwang Situations
- See Economic Zugzwang: Whoever Moves Loses for a description of why Bernanke is in Economic Zugzwang.
- See E*Trade’s Questionable Receivables for why E*Trade (barring some white knight rescue) is in Economic Zugzwang.
- The mothball strategy where homebuilders “can’t make money by building and can’t make money by not building” is yet another version of Economic Zugzwang. For more on the mothball strategy please see Tuesday’s dose of Five Things by Professor Depew or my take called Mothball Housing Strategy Doomed To Fail.
- Caroline Baum and Paul Kasriel seem to be on board the Economic Zugzwang bandwagon even though neither used the term explicitly. Caroline has the right game though, chess. Her point of view was expressed in Weak U.S. Dollar May Be `Checkmate’ for the Fed
As we head into a recession look for more instances of Economic Zugzwang. The global economic imbalances in conjunction with excessive leverage everywhere guarantees it.
Mike Shedlock / Mish
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