4 ms·
Credit slushes around like crazy for years. These days it flows into an S&P trading near 20 P/E, negative government bond interest rates, corporate bond interes
by riskneural 11y ago
Credit slushes around like crazy for years. These days it flows into an S&P trading near 20 P/E, negative government bond interest rates, corporate bond interest rates below historical default rates, reinsurance treaties and cat bonds trading below expected value, and what else?
Demand needs to pick up with credit availability or it just leads to asset bubbles.
- narrator 11y agoHere we have Grand Poobah of Keynesian economics and Nobel Laureate Paul Krugman in 2002 calling for a Housing Bubble to replace the NASDAQ bubble: http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html?scp=4&sq=krugman%20mcculley%20bubble&st=cse http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip... >To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. The American economy loves a good asset bubble.
- AlisdairO 11y agoThat's completely out of context. He's not suggesting that it's a good idea, he's discussing the Fed's motivations.