Looking Back

I wrote a lot about the economy last year before we went to Europe. So I decided to look back and see how accurate I was. I predicted stagflation in a year. Well, pretty close. We are having a fairly high inflation rate combined with what in retrospect will be called recession. Of course we are now in the ultimate credit crisis which may just lead to a great depression. I wrote this about financial liquidity in August '07.

Banking crisis
Bush flexes his MBA muscles and says liquidity is fine. "There is plenty of liquidity." But in the meantime the Fed has to put $38bn of "new money" (fresh off the presses) into the system while overseas central banks have to put $91bn into their markets. Fed chairman is looking down the barrel of having to decrease prime which may fuel inflation. And the mortgage crisis has just begun. Banks and lending companies are looking at deeper holes later this year and into '08.