As I mentioned in my last post, taking toxic securities off the books is no guarantee of freeing up funds -- once bitten, twice shy.� So the Treasury/Fed are now going full barrels -- buying equity positions in banks and requesting for a 2nd stimulus package.� Banks have tightened up like frightened turtles -- we are now either going to 'buy' them into making loans or we will provide consumers with additional purchasing power to make demand look better.�
Missing in all this: what is the natural level of supply and demand.� Are the Fed/Treasury providing liquidity or now just manipulating the market?
My view is that this is the equivalent of 'the hair of the dog' answer to being hungover - at what point do you just sleep it off?
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