On November 15 I wrote regarding the November retail numbers:
If the news is bad, the Fed will feel justified in declaring that the risk of a recession is higher than the risk of inflation, and lower the rates a little bit more. Either way, at this , the end will be the same. There is only one way to solve this situation, and it is the immediate withdrawal from Iraq, which is eating our economy away much in the same manner as the Vietnam War did, and the Afghanistan invasion did with the Soviet economy.
Now we know the answer. The news are bad. We are marching towards a 50 point cut in December, and more and more policies to inject liquidity into the markets. If you are long term reader of my blog you know that this is the scenario I’ve been using as most probable since August.
Don’t get swayed by the news, keep you eye on the ball and prepare for the most probable outcome, that’s my philosophy. Right now we are moving into a period of high inflation, or even hyperinflation. The next wave of manic growth of the real estate market should be a great opportunity for those who understand the workings of inflationary processes at the expense of those who can only access to adjustable-rate loans or decide to use adjustable rate loans for other reasons.
If the Administration plan of freezing adjustable mortgages passes with a five year period, we will know exactly when the next bomb will explode.
Franklin @ December 6, 2007