I've been thinking, today, of the investors and entrepreneurs who bought the talk about sustained recovery and put money on the line during the eight quarters since the recession's official end. They will be punished for their daring if the economy falls back into recession, and the firms that built up ever larger cash piles will be vindicated. It will be harder than ever to pry firms and households away from a deflationary mindset. That's an extremely troubling thought. Risks are pointing overwhelmingly to the downside here, and if major central banks fail to react, the carnage will only grow.
- From The Economist Free Exchange Blog