Thursday, March 20, 2008

Welcome to the World Bush Made

Prof. Brad DeLong looks at the yield curve and finds the one month Treasury rate nearing the zero bound. Meanwhile, "the TED spread--the risk and liquidity premium big banks are demanding over Treasuries for the loans they make to each other" is jumping up to panic rates. Professor DeLong concludes: "Be afraid. Be somewhat afraid."

Deflation and descent into a prolonged recession, or inflation and ascent into a prolonged period of stagflation. Welcome to Bush World.

No comments:

Post a Comment