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Central Missouri | Here is a blog on Mish's site ..... http://globaleconomicanalysis.blogspot.com/2009/12/interview-with-c...
Reading between the lines here s what I deduce
1. Banks balance sheets are in deep doo doo for another couple of years which means short term interest rates will be kept at zero as that is the way the fed and treasury will try to help the banks work their way out of their problem.
2. Bank closings will continue; make sure the money you have in the bank is fdic backed
3.This may be a stretch but the interviewee says that overproduction of cre is taken care of by putting businesses in the buildings. I don't think many of these buildings will be occupied for years meaning many of these projects will take a 75% value haircut.
NOW, here is the real take that I see, what has the govt response to all of this been?
1. Print and spend and Obama said that will continue
2. Short interest raes to big banks at zero
3. Allow banks to be upside down on their balance sheets.
THIS WILL ALL CONTINUE IMO.
Here is my take on the outcome; one of 2 things:
1. The printing and deficit spending will cause the dollar to go down in the long run
2. This may not fix the banks balance sheets fast enough and the whole banking system will collapse. (lets hope this doesn't occur)
The net effect is each dollar will buy less or in the converse it will take more dollars to buy the same thing because each dollar will buy less. Just some thoughts as I go thru the economic stories from last week. | |
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Read between the lines
