Replies to post #157855 on Zeev's Turnips Patch-No Politics (ZEEV)

[Ace Hanlon]

Zeev:

With a Watergate type scandal hanging over the White House people should remember what happened to the market during the original scandal. A MAJOR bearish factor being ignored. I wonder for how much longer -- especially if people begin to doubt the Bushies and Republicans will be re-elected

[Culmus]

I agree Zeev, those complaining that the rush of rate cuts didn't produce a booming economy last year already have no clue in which deep trouble we'd be by now had these cuts not occured. On the other hand 20 years ago rate cuts of this magnitude would have resulted in economic growth rates of 6 to 8%, which goes a long way to show just how severe the structural problems of the US economy currently are.

Culmus

[Elroy Jetson]

Experiencing ten years of monetary devaluation and slow to non-existant growth would indeed be a small price to pay to unwind the current debt bubble - and the stock and real estate bubbles which were created, quite incidentally, to support the debt bubble.

But this assumes more of the same will successfully unwind this problem.

I personally don't forsee the happy outcome you are looking forward to.

People rarely get out of debt by obtaining increases in their credit limit.

Those that support the "Austrian" view of extreme discipline in monetary and fiscal policy should recognize that without the feds action, the last recession could have looked like the 29/32 affair and would have involved great misery to the 36 MM people that could have "potentially" lost their job.

Spending ten years or so in a process of gradual realignment and reequilibration of the the economy after he bubble, is in my humble opinion a small price to pay to avoid such miseries.