Accountability — As we teeter on the cusp of a recession and markets linger in the bear market territory, one has to wonder: How did we get here?
Well, some might argue that in the summer of 2021, the economy had sufficiently recovered, shots were going into arms left and right, and the first hint of pent-up demand was being let out of the bottle.
This was a good news story, but it wasn’t good news enough. So what happened? Well, both the politicians and the central bankers kept spiking the punch bowl.
Even after trillions in stimmy checks (much of that money stolen, honestly) and more than half the country by territory re-opened, Congress thought that more stimulus was a good idea. They called their bills “comprehensive”; I called them reckless.
At the same time, the Fed’s balance sheet continued to balloon. They were adding to their own book at a rate of $120Bn a month; an unsustainable rate, to say the least.
But policymakers aren’t the only ones to blame. Think of the Robinhood Trader, yolo-ing their stimmy checks into Deep OTM Meme Stock Calls (DOMSC) from their parents’ basement.
These cats (and maybe the guy who swore he wasn’t a cat) made literally millions of dollars pumping up tech names and zombie companies that don’t turn a profit. After all, stonks only go up, right?
Now, the Fed is in full vindictive mode; rates need to rise to the point of crippling the economy to correct inflation. Some say that the Fed needs to force higher unemployment to get there, which is a long way off given that there are more than ten million open jobs waiting for butts in seats.
We can point fingers at all sorts of groups as to how we got here. I’m waiting for a book on this one (looking at you, @AndrewRossSorkin and @MichaelLewis). But in the meantime, all we can do is keep an ear to the ground to help plan our next moves.
|
Accusantium reprehenderit qui est ea. Ratione repudiandae aperiam voluptas nam. Sint voluptatem quibusdam nemo.
Laborum aliquam esse id quo laudantium dolore deleniti. Officiis asperiores pariatur vel consequatur nulla eligendi perferendis.
Illum autem exercitationem accusantium iste ex. Saepe laboriosam odit dolores voluptate sint soluta. Quo possimus eum quia cupiditate deserunt quidem. Ad aut laudantium et recusandae esse dolores suscipit impedit. Autem vero fuga ut ut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...