Did you prefer the term "deleveraging?" I thought it shortsighted. What about the rally in the dollar despite the consistent lowering of rates and the tarp? Edit- the bubble ie credit.. is money in the system that has been removed, so it is deflation correct? The spiral would be banks receiving billions but not lending, so it was continuing.
There's a saying I've been repeating on elite trader for awhile: NO ONE CARES ABOUT THE HOUSING It is true. Housing start, permits, ect news doesn't move the market because there was no housing bubble. When the news was released the markets didn't tank, but closed the day up 360 points. Historically real estate always goes up, but there was a tad of irrational exuberance in some regions; particularly northern Florida and Arizona. That explains why defaults are still so low and why many areas such as Manhattan, Palo Alto, and Aspen are unaffected by the non bubble. The economy is deflating, but the deflation is minor, and very easy to fix by simply cutting rates to zero and infusing tons of stimulus and passing bailouts.
I would suggest that you are not being entirely accurate in your characterization of the current deflation as being minor. This is substantiated by the fact that the FED is taking extraordinary and UNORTHODOX measures to combat the current deflation.
By taking these drastic measures the FED is ensuring that the stock market & economic recovery is v shaped.
Like there was no housing bubble? Like Bear Sterns wasn't going to go under? Like there wasn't going to be a bear market??? In fact you were so sure of that you said you would stop posting! Yeah your a man of your word. And you've been wrong almost everytime you've typed a post. And when you've been wrong as much as you have, why do you keep calling people noobs?
A stupidity bubble is worse. FED is trying to solve a credit crunch by lowering interest rates to zero. This will not change the fears of banks and hoarding mentality and will not have an impact on aggregate supply. However, it will affect the dollar and commodities will go up along with imported inflation. Guess what? Situation worse after one year from now.
I agree with that, that action far from bringing good things to the economy by stimulating consumer spending is going to have a real bad effect on the economy in a long term. Remember how the whole subprime mortgage situation started?