american banks have written off 130 billion to the point where they have 0 cash on their balance sheets...........yet they still have more writedowns to announce..... and the bond reinsurers need about 200 billion cash to maintain their AAA rating bernacke is hyperinflationist hell bend on avoiding a recession meaning he is likely to lower to at least a 2% fed funds congress and pres. candidates are clueless and think a 140 billion handout is the answer so my question is: will we do the right thing, bite the bullet, allow firms and credit fiend consumers to go bankrupt and be replaced by more responsible businesses/consumers? will we end up in a long drawn out 10+ year recession like japan due to and unwillingness to allow market imbalances to correct? or will we hyperinflate until the rest of the world says enough and jacks up rates causing the dollar to crash......then move in like vultures to buy up american assets?
You are right on many points. A recession wouldn't be such a bad thing but I think the Fed is trying to ward off a depression. If the economy is hyper-inflated it's just delaying the inevitable. The US is due for a Japan-like severe recession. At some point - no one knows when this will be - lower interest rates won't work. The only thing that will remove the excesses from the system will be the passage of time. In the meantime, the Fed is hell bent on driving growth so don't fight the market if it continues up.
Growth for USA forget it 10 years ago it took $0.50 of National debt to get $0.01% growth, now its about $2.00, and getting higher. This means the ratio of borrowing requires to get higher growth has sky rocketed. Consumer spending will fall, so will other dominos. BUY SWISS BONDS, hedge and income.
i thought it was $5 of debt to yield $1 of GDP.... cant seem to find a the same number from 2 sources....
Deflation not inflation is the result of credit bubbles. Fed lowerd the rates to try and keep as many people as possible employed as long as possible. As bad as housing is now it would get a lot worst if employment got to 6-6.5% so the Fed is doing what they can to not get there. John
Basically the Fed is trying to create the fabled 'soft landing', only two reported sightings in the wild in economic history. An economy may have a remote chance of a soft landing, but stock markets NEVER do.