Zeev,
On the fear of recession: won't any recession be shallow? AG and the Fed have a lot of room to lower rates from here. Real rates are extremely high--if we have 1.5% inflation, the roughly 4% premium for short or long rates is historically very high, he could drop Fed Funds back to 3.5%, and still be on the high side. The question then becomes, I suppose, can the US and Europe have decent economies without Asia participating? Asia will continue to produce cheap goods--even cheaper with their devaluations. Would, e.g., Latin America pick up some of the slack from the Far East? What effect would cheaper money have? More home and auto sales, more furniture buying, more refinancings, while the flowing goods from Asia may well still keep prices in check.
Just some rambling,
s. |
