The Nightmare Scenario

(Via Calculated Risk)

Bank of America put out some dire words yesterday. Run for cover!

"...the debt financed spending spree of consumers is petering out while the almost unprecedented surge in government spending looks increasingly unsustainable"

"Skyrocketing house prices" had enabled consumers to draw down "staggering" levels of mortgage equity for spending. But the "multiplying" effect of the boom was running out under the delayed impact of earlier rate rises.

"We cannot rule out a nightmare scenario in which a decline in consumption caused by a sudden correction in house prices would lead to an explosive rise in the fiscal deficit that would have to be addressed by a tighter fiscal policy,"

Oh, wait. They're just talking about Britain. Phew. Nothing like that can ever happen here, right?

--Battlepanda

You need to be logged in to comment.
(If there's one thing we know about comment trolls, it's that they're lazy)

Connect
, after login or registration your account will be connected.
Advertisement