Technicals aside (which I look to those here and elsewhere for expertise and interpretation), the fundamental destruction on the horizon, will not just rival but exceed what we saw last year. Not only will the resets of the Option and Alt-A presage a more massive wave of foreclosure than we've already seen but, the commercial real estate crash, which has barely begun and is essentially a
fait accompli. The difference is trillions of dollars have already been thrown at the banks and other areas of the economy that had not yet been thrown out there at the time we were in "free fall." last year. Can the Fed go to that well to that extent again for this round of destruction re-propping the stock market when what has already been thrown out there during the last round is raising rates and setting the U.S. up for massive inflation?
When I look at that Credit Suisse residential reset chart alone and all the money for bailouts and prop-ups done, it looks to me like the last six to eight months have been nothing more than the eye of the tsunami passing through and the run-up in the stock markets since March, the delusion of the hopers. As IYB said yesterday night, this isn't "different." There will come a time, when reality will be undeniable. It happened in the 1930's after government intervention gave false hope in the face certain realities and it will happen in the 2010's.
Edited by milbank, 07 June 2009 - 05:48 PM.
