well economy is nearing fair value. Problem is that those metrics could go lower. But 1949 was a good year for the start of a secular bull trend. But are we in 1949 or are we somewhere between 1930 and 1948? My guess is that if we count the Asian credit crisis as the start of all this and the start of 1999 market crash, then everything going forward has been part of a overall global contraction with Japan heralding this. That means that pre1999 credit was being supplied because there was actual demand for it.
Post 1999 the credit expansion has been due not because there was demand but to oversupply the market and make credit cheap and available to even those who do not necessarily need or understand it.
Cheap credit made more participants but increased over all risk. Global participants are unconsciously aware of this and are rebuffing the liquidity in credit. That is why the majority are ok with tax increases and reject bailouts. The mindset is returning to a preservation of capital focus. This is health activity and will support another new secular bull in 5 to 10 years. I think we are about midstream through this phase. The next 2-5 years will be truly ugly. But while the midset gets worse the actually economy will get better.
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