So, here is what I get from the Austrians: Some day Alan da Printer is going to hit zero on rates. Fannie and Freddie's balance sheets will have teetered over on their sides after hitting the iceberg of reality. The service economy will be taken off its speed habit cold turkey. Mfg., already in depression, won't get much worse, but the market will go to heck in a handbasket. And, as always, there will be a number of stocks and cos. that do o.k., and the way the markets are rigged, make the indices look much better than the reality. But still pretty bad.
As I try to think about this, I realize that I don't have a very good handle on what a popping credit market bubble will look like -- what is the order of events, what sectors will get hurt most, etc. Will the consumer credit market freeze up? or will lenders just suddenly remember to ask if the customer is credit-worthy? What will happen to existing mortgages and all their derivatives?
Any advice for the perplexed welcome. TIA. |
