Striking Out

Here comes the rain again
Falling on my head like a memory
Falling on my head like a new emotion
--Eurythmics

After 125 bips of Fed love and an election year government tripping over themselves with fiscal stimulus, it's easy to conclude that the worst is over w.r.t. the credit markets. After all, notes Jeff Saut, this kind of intervention has worked time and time again in the past.

However, Minyan Peter thinks we have lots more work to do. Financial institutions current face gross risk that are almost incalcuable. Awareness of this risk appears to by seeping into lending behavior as the cost of credit is going up.

I continue to ponder the possibility of a broad deflation driven more by a seller's strike (lenders not wanting to lend) than a buyer's strike (borrowers not willing to borrow).