Somehow the notion of a rate hike now seems suicidal.
Consider:
This is not your average "recovery." This is, or was, a recovery
FROM GLUT TO GLUT.
In other words, the "sine quo non" of this so-called recovery was the
AMAZING ONE PERCENT SOLUTION.
That said, the ONE PERCENT SOLUTION has caused it's own problems.
First and foremost, IT REQUIRED, INDEED MANDATED, THE EVOLUTION OF
THE CARRY TRADES! SECOND, IT FORCED MANY INVESTORS INTO ODD TRADES THEY MIGHT NOT HAVE MADE OTHERWISE.
Worse yet, those Carry Trades are now massive, and involve the
BIGGEST INSTITUTIONS IN THE US ECONOMY; Fanny, Freddie, and the BIG
banks namely.
Additionally, we have a new market psychology that is on the hair
trigger for almost everything.
And, if the props are kicked out from under certain bond trades, many
strange and unpredictable things can happen.
And, of course, the entire mess comes from the Fed's burning desire
to restore the Bubble of 1999!
Also, to give "good" corportions their "special currency" to "promote
growth" in the economy. Even as the worker languished in low wages
and higher debt.
Is a rate hike possible under these SPECIAL CONDITIONS?
Well, maybe............but still the risk/reward ratio is not good.
THE FED CAN JAWBONE ON RATES, TO BE SURE, BUT I JUST DON'T SEE HOW
THEY PULL OFF AN ACTUAL RATE HIKE WITHOUT CRASHING THE GLOBAL ECONOMY.
INDEED, GREENSPAN IS, SORT OF, IN THE POSITION OF THE OLD MOVIE
MAGICIAN, WHO ATTEMPTS TO QUICKLY PULL THE TABLE CLOTH OFF THE TABLE,
WITHOUT MOVING OR UPSETTING THE DISHES!
BUT ALAS, IN MR GREENSPAN'S CASE?
I JUST DON'T SEE A "HOLLYWOOD ENDING" HERE!
ANY ATTEMPT AT "NORMALIZATION" COULD BRING ON A PANIC THAT WOULD BE ANYTHING BUT "NORMAL!"
