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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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From: UncleBigs12/4/2005 11:47:34 AM
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While the last reflation restructured corporate balance sheets and set off the mother of all bubbles in housing, the next reflation will restructure consumer balance sheets as they are able to refinance into fixed rate mortgages at very low rates.

The problem is there is nothing else to bubble up to support consumer spending. Lower mortgage payments will help but it won't offset the spending frenzy triggered by cash out refis and capital gains.

I think the best the Fed can hope for in the next reflation is to let down asset values gradually.

Won't it be ironic that Greenspan will probably go out to a universal round of applause while historians will likely view him as the worst central banker (or second worst after Bernanke) in history for creating bubble after bubble and perpetuating the massive imbalances.
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