Wendy, his remarks are not unexpected, and frankly, one of the reasons I am bullish on the second half is that I expect AG to actually lower the discount rate the avoid too rapid a deflation. If we get three months in a row of -1% annualized inflation, I think that AG will step into the breach to prevent a spiralling defaltion (remember, defaltion means default induced deflation). Short term, however, I have a feeling that a lot of financial institutions in the world (and here as well) will have to start and write down some uncollectible debt, and I also see many more warning on future earnings. I think that in the face of these, the Goldilock scenario will have to rest for few months.
A lot of ammunition has been fed to this rally, and I think this excess liquidity is pretty well soaked up. So, I would say, have a bear party, it is coming back to town.
Zeev
PS, that blushing Turnip must have been in the Monica camp, she blushed for a very short time and now has paled back. |
