rosey99

Consumer Spending: Have We Learned Nothing?

Patience, and more patience, that's the prescription for what ails you TraderMark. Eventually we will get to see what the economy really looks like without all that government largess sloshing around. IMO, we are closer to that day than most realize, but who can say?

And after that, it will be interesting to see how, for example, the FED unloads all those MBS and other dubious assets. It could get very interesting, and we should all be careful what we wish for. Just a gut feeling - pure speculation, if you will - but the situation seems pretty fragile to me and I don't know how much longer the distorting combination of QE, ZIRP, and consumption subsidies/handouts will last. Something will likely give within months, not years, and the picture will come more into focus. I don't think it will be a very pretty picture, but that's just my opinion. Simply put, in the end I think they will just give up (more or less) and try instead to manage deflation. It could be a big policy fight, but in the end I don't really see that there will be much choice. At this point just about every tool they have is either blunted or broken.

To paraphrase Ross Perot: "The sucking sound you will hear will be the sound of contracting credit." Add higher taxes to the mix, and it could suck, blow, and really hurt all at once. But I guess it has to happen, or at least that's my two cents worth.

So patience my man. . .Soon we'll know if the future will taste bubbleicious or deflationtastic. I honestly don't think it will be a blend.