Ever one to fan the flames of paranoia, I thought I'd toss this out for debate:
The events of the past several weeks have been "interesting" in the Chinese curse sense
and compounded with this being a major election year ... only 2/3 of the Senators exempt. In other words, about 500 major politicians have their asses in a sling and are in a tizzy about how to spin the various ecnomic ills. Of course, almost anything they do will be wrong, but, for argument, the question might be...
Regardless of who gets (re-) elected in just a month or so, what might the government to
screw things up worse than they already are,
wait I mean:
remedy the increasingly worrisome situation? Or more pessimistically, what harsh measures might we see? Here's some ideas:
huge increase in short term interest rates (remember Volker?) Unlikely, sure, but what if the Fed is forced by outside events?
Housing prices continue to drop, already they are down like 30% from the peak, let's say they drop so they're 50% off the peak. We are talking major mortgage defaults, foreclosures, and compounding of the ills currently giving everybody the willies.
Oh, let's see, the stock and bond markets will drop another 40% or so....