Friday, March 29, 2013
Capital Markets
Friday March 29, 2013
By Lou Barnes
Long-term rates fell this week to the lows of 2013, mortgages stickier than 10-year T-notes. Although long Treasurys made it to 1.85%, mortgages are still 3.75% or so — the mortgage market frightened to death that any loan it buys today will live until its 360th payment.
Trading everywhere has ceased in the every-spring, four-day, Passover-Good-Friday-Easter pause. Next week brings a flood of brand-new information for March, capped on Friday by employment data. Thus a good time to reflect.
I do not recall a moment in which so many economic elements at the same time have been at points of inflection. In the old days (five years ago) nothing much mattered except US data; in global markets the world is more important than the US.
1. Rates are down because of Europe. Period. Euro elites are secure looking down their noses: “Cyprus is unique, the euro-zone will be fine, just a little austerity and economic reform ahead.” Au contraire… bank funding costs in March everywhere except Germany rose by 25% (who wants a haircut at shoulder-level?); French and Spanish 10-year yields are opening versus German; nobody is making fiscal progress, the combination of austerity and euro-shackles making recovery impossible. Yet everyone who has cried euro-failure “Wolf!” has been premature. Or wrong: maybe there is no wolf at all. Or, if the wolf finally does arrive, the bigger the shock.
2. The stock market set a new high yesterday, greeted by no exuberance. Usually a technical “breakout” like this is followed by a big run. Not. This new high is a half-inch above the same top in 1999 and 2007. Whee. And yet… stocks could really run and bring back the wealth-effect.
3. That wealth effect may already be here. This morning’s news: personal incomes jumped 1.1% in February and spending with them, up .6%.
4. More. Home prices are rising in every desirable market nationwide. Discounting for fewer distressed sales, the 25% drop making prices appear to rise faster than they are, the national move is 5%-10% annualized. The most attractive markets are now in auction conditions, multiple offers the rule. Still, ordinary markets are flat.
5. The absence of housing inventory is weird. Even big, production builders are having a hard time with credit, impeding construction. Maybe inventory is low because people have no place to move to. But, maybe, household conditions are weaker than we think, beyond the underwaters, and we’re enjoying a spurt from the fraction of households making it through the Great Recession unscathed.
6. Remember the Fiscal Cliff, tax increases, the Sequester? Are we suddenly so healthy that none of that mattered?
7. Japan. Gross national debt (Japanese Government Bonds = “JGB”) now 245% of GDP. Excluding the portion held by the Bank of Japan, 145%. 10-year JGBs pay 0.55%, that yield down by half in one year. The BoJ will within weeks begin to buy JGBs (and a lot else) with the intention of reversing 1% deflation into 2% inflation. This is the ultimate extreme of the central-banking project: ignite Japan’s economy and generate tax revenue (today adequate to fund less than half of government spending; more than half of that interest alone), or suffer the most spectacular default in history.
8. Perfesser Bernanke is going to retire at year-end. Vice Chair Janet Yellen is in the lead to replace him, and this week NYFed prez Bill Dudley began his campaign. Both are very able, both deep believers in a strong-intervention Fed. Whoever gets the Presidential nod at about Labor Day will then face confirmation hearings in the Senate, and the most ignorant and undignified philosophical combat since dinosaurs were placed in a museum beside Adam and Eve. Markets will be a tad uneasy.
We have all wished to escape the mire of the last five years. This way?
Do enjoy the long weekend. Stuff in the fan at dawn Monday.
What to you call an anaesthetized rabbit? The ether bunny. What to you call a row of rabbits jumping backward? A receding hare line.
By Lou Barnes
Long-term rates fell this week to the lows of 2013, mortgages stickier than 10-year T-notes. Although long Treasurys made it to 1.85%, mortgages are still 3.75% or so — the mortgage market frightened to death that any loan it buys today will live until its 360th payment.
Trading everywhere has ceased in the every-spring, four-day, Passover-Good-Friday-Easter pause. Next week brings a flood of brand-new information for March, capped on Friday by employment data. Thus a good time to reflect.
I do not recall a moment in which so many economic elements at the same time have been at points of inflection. In the old days (five years ago) nothing much mattered except US data; in global markets the world is more important than the US.
1. Rates are down because of Europe. Period. Euro elites are secure looking down their noses: “Cyprus is unique, the euro-zone will be fine, just a little austerity and economic reform ahead.” Au contraire… bank funding costs in March everywhere except Germany rose by 25% (who wants a haircut at shoulder-level?); French and Spanish 10-year yields are opening versus German; nobody is making fiscal progress, the combination of austerity and euro-shackles making recovery impossible. Yet everyone who has cried euro-failure “Wolf!” has been premature. Or wrong: maybe there is no wolf at all. Or, if the wolf finally does arrive, the bigger the shock.
2. The stock market set a new high yesterday, greeted by no exuberance. Usually a technical “breakout” like this is followed by a big run. Not. This new high is a half-inch above the same top in 1999 and 2007. Whee. And yet… stocks could really run and bring back the wealth-effect.
3. That wealth effect may already be here. This morning’s news: personal incomes jumped 1.1% in February and spending with them, up .6%.
4. More. Home prices are rising in every desirable market nationwide. Discounting for fewer distressed sales, the 25% drop making prices appear to rise faster than they are, the national move is 5%-10% annualized. The most attractive markets are now in auction conditions, multiple offers the rule. Still, ordinary markets are flat.
5. The absence of housing inventory is weird. Even big, production builders are having a hard time with credit, impeding construction. Maybe inventory is low because people have no place to move to. But, maybe, household conditions are weaker than we think, beyond the underwaters, and we’re enjoying a spurt from the fraction of households making it through the Great Recession unscathed.
6. Remember the Fiscal Cliff, tax increases, the Sequester? Are we suddenly so healthy that none of that mattered?
7. Japan. Gross national debt (Japanese Government Bonds = “JGB”) now 245% of GDP. Excluding the portion held by the Bank of Japan, 145%. 10-year JGBs pay 0.55%, that yield down by half in one year. The BoJ will within weeks begin to buy JGBs (and a lot else) with the intention of reversing 1% deflation into 2% inflation. This is the ultimate extreme of the central-banking project: ignite Japan’s economy and generate tax revenue (today adequate to fund less than half of government spending; more than half of that interest alone), or suffer the most spectacular default in history.
8. Perfesser Bernanke is going to retire at year-end. Vice Chair Janet Yellen is in the lead to replace him, and this week NYFed prez Bill Dudley began his campaign. Both are very able, both deep believers in a strong-intervention Fed. Whoever gets the Presidential nod at about Labor Day will then face confirmation hearings in the Senate, and the most ignorant and undignified philosophical combat since dinosaurs were placed in a museum beside Adam and Eve. Markets will be a tad uneasy.
We have all wished to escape the mire of the last five years. This way?
Do enjoy the long weekend. Stuff in the fan at dawn Monday.
What to you call an anaesthetized rabbit? The ether bunny. What to you call a row of rabbits jumping backward? A receding hare line.
Friday, March 22, 2013
Capital Markets Update
Friday March 22, 2013By Lou Barnes
Long-term rates, the 10-year T-note and mortgages, are approaching their lows of 2013 because of Cyprus — which could disappear in a volcanic explosion (as did nearby Thera) and do no particular harm to the global economy.
New US data is all housing and debatable, although optimistic voices drown all others. The builder-opinion index (NAHB) actually fell a few points in March, and rising measures of prices are distorted by the drop in distressed sales and rise in normal ones. There is no question that housing has now turned upward, but Morgan Stanley’s caution is dead on: “The uptrend is likely to be shallow… credit is still hard to get.”
Buried in the Cyprus story is one terribly important matter, but it’s deep down. The news on the surface has been mangled all week long: those mean Germans want to skin Cypriot depositors before giving aid to Cypriot banks, and the precedent means trouble for any other Europeans sporting a tan.
Upon excavation, it seems that Cypriot bank deposits are about seven times the GDP of Cyprus, roughly $41 billion, of which about half have been misplaced in unfortunate loans in Greece. However, most of the deposits — estimates as high as two-thirds — are not Cypriot. They belong to Russian oligarchs and gangsters. Since the time of the Czars, and then the Soviets, nothing has so annoyed Russian nobility as someone stealing from them something that they had already stolen. Vladimir Putin’s howl of protest at a depositor haircut is comedy as black as his heart.
Even if North Europeans refuse to bail out the Cypriot banks, and over this weekend they close for good, contagion to the rest of Club Med is remote and no precedent will have been set. But Europe’s real situation is precarious and deteriorating, and any euro-zone accident reminds markets of the overall sham.
Now, the important part. Ever since the summer of 2007 the West has been caught in the greatest bank run of all time. In the crisis still underway, the idiot Left and idiot Right have agreed on only one policy prescription: don’t bail out banks. Let ‘em fail. Bust up the big ones and then let the pieces fail. No taxpayer money. Elizabeth Warren and Rand Paul, all aboard. (Oh, to watch them share an office!)
But, as satisfying as let-’em-fail revenge could be, “No bailouts!” has been too rough on academic and European ears, thus the nouveau term, “bail-in,” meaning losses to be taken internally. Everyone agrees that bad-bank stockholders should lose all, and so it was with Lehman, et al. The argument begins with holders of bank bonds, long-term IOUs of the banks. The bail-inners think they should be wiped out, too.
Yet, sensible bank regulators know that banks are safer the more their liabilities are long-term, not just “hot money.” Long-term money can’t run. Since 2007 in the US we have protected bondholders as we have depositors, on the theory that if we wipe them out, we’ll make the run worse, and nobody will again take banks’ long-term IOUs. If you want to stop a run, you make depositors — and bondholders — feel so safe by government guarantee that they won’t run. Either stop the run by throwing-in new money and guarantees, or risk losing the system altogether.
The bail-inners and let-’em-failers are certain that if we punish bondholders, then they’ll take IOUs only from solid banks, moral hazard will be restored, and we won’t have any more failed banks for taxpayers to worry about. These hardheads cannot understand that banks so sound will not generate credit for taxpayers, either.
Denmark has engaged in bail-ins, and the jury is out, credit imploding. The Netherlands is fiddling with bail-in, led by Finance Minister Jeroen Dijsselbloem, who is also president of the euro-area finance ministers. He insists — with company — that bondholders should take a haircut in any bank failure, and he is the leader of the barbers of Cyprus. Along with the Germans, shears always at the ready.
That is precedent. Not Cyprus. The European trail of self-deception is also precedent and threat to all. Cyprus will find a solution, and our rates will slide back up, anticipating US economic strength, but the ka-boom in Europe lies ahead.
Thanks to www.calculatedriskblog.com. Sales of existing homes are already in a normal range, but still at least one-third distressed in some way and heavily bought by cash investors — I think confirmed by the still-flat chart of purchase loan applications.
Long-term rates, the 10-year T-note and mortgages, are approaching their lows of 2013 because of Cyprus — which could disappear in a volcanic explosion (as did nearby Thera) and do no particular harm to the global economy.
New US data is all housing and debatable, although optimistic voices drown all others. The builder-opinion index (NAHB) actually fell a few points in March, and rising measures of prices are distorted by the drop in distressed sales and rise in normal ones. There is no question that housing has now turned upward, but Morgan Stanley’s caution is dead on: “The uptrend is likely to be shallow… credit is still hard to get.”
Buried in the Cyprus story is one terribly important matter, but it’s deep down. The news on the surface has been mangled all week long: those mean Germans want to skin Cypriot depositors before giving aid to Cypriot banks, and the precedent means trouble for any other Europeans sporting a tan.
Upon excavation, it seems that Cypriot bank deposits are about seven times the GDP of Cyprus, roughly $41 billion, of which about half have been misplaced in unfortunate loans in Greece. However, most of the deposits — estimates as high as two-thirds — are not Cypriot. They belong to Russian oligarchs and gangsters. Since the time of the Czars, and then the Soviets, nothing has so annoyed Russian nobility as someone stealing from them something that they had already stolen. Vladimir Putin’s howl of protest at a depositor haircut is comedy as black as his heart.
Even if North Europeans refuse to bail out the Cypriot banks, and over this weekend they close for good, contagion to the rest of Club Med is remote and no precedent will have been set. But Europe’s real situation is precarious and deteriorating, and any euro-zone accident reminds markets of the overall sham.
Now, the important part. Ever since the summer of 2007 the West has been caught in the greatest bank run of all time. In the crisis still underway, the idiot Left and idiot Right have agreed on only one policy prescription: don’t bail out banks. Let ‘em fail. Bust up the big ones and then let the pieces fail. No taxpayer money. Elizabeth Warren and Rand Paul, all aboard. (Oh, to watch them share an office!)
But, as satisfying as let-’em-fail revenge could be, “No bailouts!” has been too rough on academic and European ears, thus the nouveau term, “bail-in,” meaning losses to be taken internally. Everyone agrees that bad-bank stockholders should lose all, and so it was with Lehman, et al. The argument begins with holders of bank bonds, long-term IOUs of the banks. The bail-inners think they should be wiped out, too.
Yet, sensible bank regulators know that banks are safer the more their liabilities are long-term, not just “hot money.” Long-term money can’t run. Since 2007 in the US we have protected bondholders as we have depositors, on the theory that if we wipe them out, we’ll make the run worse, and nobody will again take banks’ long-term IOUs. If you want to stop a run, you make depositors — and bondholders — feel so safe by government guarantee that they won’t run. Either stop the run by throwing-in new money and guarantees, or risk losing the system altogether.
The bail-inners and let-’em-failers are certain that if we punish bondholders, then they’ll take IOUs only from solid banks, moral hazard will be restored, and we won’t have any more failed banks for taxpayers to worry about. These hardheads cannot understand that banks so sound will not generate credit for taxpayers, either.
Denmark has engaged in bail-ins, and the jury is out, credit imploding. The Netherlands is fiddling with bail-in, led by Finance Minister Jeroen Dijsselbloem, who is also president of the euro-area finance ministers. He insists — with company — that bondholders should take a haircut in any bank failure, and he is the leader of the barbers of Cyprus. Along with the Germans, shears always at the ready.
That is precedent. Not Cyprus. The European trail of self-deception is also precedent and threat to all. Cyprus will find a solution, and our rates will slide back up, anticipating US economic strength, but the ka-boom in Europe lies ahead.
Thanks to www.calculatedriskblog.com. Sales of existing homes are already in a normal range, but still at least one-third distressed in some way and heavily bought by cash investors — I think confirmed by the still-flat chart of purchase loan applications.
Friday, March 15, 2013
Capital Markets Update
By Louis S. Barnes **************Friday March 15th, 2013*******************
Long-term interest rates stayed under control this week, but barely. The economy is changing for the better: this may be another false recovery, but as they have gone this one is by far the most broad and sound since the show stopped in 2008.
Last week I questioned the report of a quarter-million-jobs gained in February. Should not have, as confirming data have arrived. The NFIB survey of small business reversed a downtrend, still in recession but brightening in February. Retail sales outperformed all guesses by miles, jumping 1.1%. And new claims for unemployment insurance have fallen to a lower range, about 340,000 weekly, not far from normal.
Despite that strength, the Treasury this week easily auctioned $21 billion in new 10-year notes and $13 billion in 30-year bonds. Markets had two supports: faith that the Fed will stay easy, and demand from overseas. Europe and Japan owe their daily survival to promises of experimental intervention by their central banks; a skeptical world finds the dollar attractive, and a stronger dollar reinforces Treasurys. The dollar is also stronger at the prospect of our becoming an energy exporter, and a stronger dollar caps inflation, which in turn makes a quick Fed exit unnecessary.
Which brings us all back to the four-ring circus of debt, deficit, stimulus, and austerity. The ease with which we have borrowed and continue to, this year down to “only” $750 billion or so, tempts many people to join the Krugmanites. Borrowing is free! Borrow, borrow, borrow! (If you get a chance to see Krugman’s latest appearance on Charlie Rose, do. Angry, incoherent, pop-eyed lunatic.)
The Fed this year is buying $1 trillion in Treasurys and MBS — more than new issuance — and providing credit at 0.25% to anyone wishing to lever a portfolio of Treasurys. “Unsustainable” is the word. The Fed and other central banks have discovered that they can store masses of sovereign debt in mayonnaise jars, but that performance of prestidigitation has a time limit on stage.
Enter Mr. Obama and his charm offensive with Republicans on Capitol Hill, trying to cross bridges that he burned from his re-election through February. The NYT quoted him after another no-progress meeting: “Our biggest problems in he next ten years are not deficits.” Fair enough. Our biggest problem is growth.
However, the biggest impediment to growth is having borrowed too much money. The same problem afflicts every Western Democracy, including Japan, excepting only the resource-rich few (AUS, CN, NOR), and the ultra-disciplined and productive (Switzerland, Finland… about all). The West is caught in the Three Bears’ Trap: not too hot, not too cold, must carefully calibrate austerity versus growth.
A sovereign budget deficit is perfectly reasonable, so long as debt does not grow faster than the economy except in emergency. All reputable evidence (Rogoff & Reinhart is tops) says that once debt reaches 100% of GDP any nation is in danger, and much beyond that level will default. We are close to 100%; even Germany’s ratio is 85% and rising. This last emergency doubled our national debt in five years. We have borrowed our safety margin, and thanks to the heroics, genius, and legerdemain of Perfesser Bernanke we may be able to resume growth and leave his ICU.
Simpson-Bowles, the President’s own Fiscal Commission, immediately agreed on the need to reach budget balance as soon as possible without aborting growth, and then to run in balance until growth pushed national debt back to 30% of GDP, thereby restoring our safety margin for borrowing in the next emergency. Which will surely come.
The dueling budgets presented in Congress this week are mutually foolish in their extremism: the Republicans’ all-cut no-revenue; the Democrats’ the reverse. However, in another way their budget folly is not symmetrical: the Republicans propose a time of balance (although too quickly), while the Democrats propose perpetual defcits of $600 billion per year through 2023, and no progress on debt/GDP ratio.
No matter how ugly the Republicans’ stingy conceit, the Democrats are the drunks. Compassion gets no credit if the end result is suicide.
Friday, March 8, 2013
Capital Markets Update
By Louis S. Barnes **************Friday March 8th, 2013********************
One of many roads converging on perdition: quarreling with economic reports. Many people do, usually for political-conspiracy reasons, but professionals are trained not to. You’re told from Day One: “Don’t fight the tape.” Don’t fight the news, or the market.
Today I’m going to.
At dawn today came glorious news: in February the nation added 236,000 jobs, and the prior two months were revised up another 61,000, in sum double the forecast. When you’re hit by one of these surprises, you stare at the market effect before studying the report: stock market futures rocketed before the open, and bonds tanked.
Then… think. A quarter of a million jobs in February? February? Howzzat? Internal aspects of the report do not confirm job heat: unemployment fell mostly because of another shrink in the workforce; the average workweek increased by six whole minutes, not exactly flooded with overtime; hourly earnings rose at the same pokey 2% annual pace, $0.04 per hour; and involuntary part-time — those who would take full-time work if they could find it — was unchanged at 8 million souls.
The almighty Bill Gross took a moment to toss a can of gasoline into the blaze, doubling PIMCO’s 2013 GDP forecast, barely 60 days old, to 3% growth for the year. You may safely assume he’s short bonds, trying to make the day as bad as possible.
At midday today not even the markets believe the job data: the Dow up only 23, the 10-year T-note damaged, but trading 2.06%, above the 2013 top by only 0.03%, mortgages holding in the high threes.
The ISM reports in the mid-50s showed some modest health in February. Next week we’ll hear from small business, at all accounts still stalled. Housing is still the darling of all optimists… change there? MGIC every 90 days releases a regional summary for its underwriters; of 73 markets covered, suddenly 25 are rated as “improving,” the best since 2005. But, improving from what? 32 metro areas are rated “stable,” 23 are “soft,” and the last 18 are “weak.” Not one, single market rates “strong.” MGIC’s adjectives are based on price appreciation. Housing is better, and will get better yet, but is not yet pulling the economy forward.
Yesterday the Fed released its quarterly Z-1 Flow of Funds and monthly consumer credit. Consumers added to borrowing at a 7% annual pace, but all cars and inherently defensive student loans, credit cards flat. Financial media trumpeted the rise in household net worth, certainly a good thing, but aggregate home values are still a little below 2006. $5 trillion below. One trend change: mortgage balances outstanding did not drop last quarter for the first time in seven years. However, they did not drop because foreclosures have slowed to a crawl, lenders preferring to mothball the zombies rather than take political heat from proceeding. Mortgage supply is tick-tight.
Ahead for the economy: the Sequester. Maybe we can pull $85 billion out of spending and grow out way right through it. The New Year Cliff resulted in another immediate $62 billion tax increase, most of it payroll taxes hitting everyone.
Every datum out of Europe is weaker than expected, political-economic resolution farther away than ever. A new chairman next month will take over the Bank of Japan with instructions to print, and nobody knows the outcome of this all-time origami party.
Long-term rates, mortgages, are certain to rise in years ahead. If today’s employment data are reinforced by future reports, and confirmed by other data, then rates can rise fast and the Fed will revise its plans. The Fed this week published forecasts of yield on the 10-year T-note, all upward, mid-2014 to 2.50% but with a 70% error range give-or-take 1%; by 2017 to 4.5% but error plus or minus 2%.
We (the world) have never been in a predicament like this, and the exit is going to be as unpredictable as the entrance. Perhaps the most unpredictable single aspect: as the economy does better and rates rise, at what point would higher mortgage rates intercept recovery? In my disbelief today, I think we have quite a ways to go before we have to worry about that.
Friday, March 1, 2013
Capital Markets Update
By Louis S. Barnes **************Friday March 1st, 2013********************
All these years, how to explain…? Mortgage rates have broken a two-month rise, falling now because of a comedian, a skirt-chaser, and a professor failed as a politician.
In Italy. Election results on Monday: Mario Monti, darling of the one-Europers and intellectual austerity, drew a miniscule 9%. The remainder split evenly between the responsible Left led by Pier Bersani; wicked Silvio Berlusconi and his conservatives; and satirist Beppe Grillo’s Five Star insurgency, anti-austerity, anti euro, and pro-lira. All refused to cooperate with the others. The Merkel Plan for endless sacrifice is done in Italy, cash heading back to US bonds and mortgages for safety.
Here at home the prospect of economic dampening by sequester also helped the rate decline. New data were garbled by January tax changes pulling some activity into 2011 and pushing some out; and housing numbers improved but are seldom reliable in winter. Many had hoped 4th Quarter GDP would be revised up to significant growth from minus 0.1%, instead only to plus 0.1%. The Chicago Fed’s national index for January fell back below trend, but February’s manufacturing ISM rose to a surprising 54.2.
Perfesser Bernanke’s testimony to Congress this week made me sad. He has aged greatly, too tired for combat with the worst of Congress, the self-important chewing on the best of us all. Senator Bob Corker R-TN displayed his single-digit financial IQ, accusing Bernanke of excessive inflation risk; Bernanke, visibly wounded, “I have the best inflation record of any Chairman in the post-war period.” Brand-new Senator Elizabeth Warren D-MA made a valid too-big-to-fail point, but lost in harridan assault. Bernanke struggled for self-control, too worn for appropriate, frosty calm.
Maybe the worst of the Great Recession is over, corner turned. Maybe nothing but patience is required, just another few years of the Fed’s QE ministration and super-low-rates to get our economy going. Housing is better, maybe soon dramatically so, and the stock market is certainly buoyant. Maybe.
But every day I get mail — temperate, well-argued, scholarly mail — questioning the central banks, all of them everywhere. Most of the worrying is standard: inflation risk, debased currency, currency wars, new bubbles, collapsed return to savers, distorted markets, debt deception, and cycles intercepted that must be allowed to play out.
There is a deeper, unsaid worry. Wise old hands say that what you’re looking for doesn’t get you, it’s what you’re not looking for that does. The deeper trouble-thought: What if the central banks trying to buy time and to bridge us to a sustainable future are buying time alone? Cumulative trouble too tough, sustainable not available?
Civilians and too many pros focus on bad banks, bad bankers, and bad loans. They figure if we clean that up and regulate hell out of it all, then we can move on. However, the real problems going back 20 years: the West has been undermined by predatory Asian exports, and has borrowed to the eyeballs to maintain its standard of living; and the Asian effort has backfired in distorted economies and too much debt of their own. The stock market and credit bubbles were symptoms, not causes.
The Bank of Japan is about to embark on an experiment never before undertaken: to induce inflation. Not to stop a credit deflation in a liquidation spiral, but in a sclerotic, un-reformed, primitive economy with a dysfunctional political system, national debt some 230% of GDP, while hoping that interest rates on that debt will stay low despite the BoJ trying to create inflation.
Pointing to Europe’s weakness is unseemly piling on. However, nothing is holding the place together but the ECB’s defiant promise to buy sovereign debt if markets deign to dump. No force of economics can generate recovery in the south, not while it is buried in euro-debt.
Here, all the voices wanting the Fed to pull back… imagine if it did. Weeks, maybe days, and back to systemic bank run. We have no guarantee that Perfesser Bernanke’s medicine will work, but have no Plan B, here or anywhere. So keep the faith. And the next time he shows up in Congress, probably his last time, mind your manners.
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